Investigate the relationship between corporate governance mechanisms and abnormal stock returns of listed companies in Tehran stock exchange Top of Form

Abstract

Objective: The present article examined the relationship between certain corporate governance variables include the percentage of outside directors and audit quality and abnormal stock returns. The main objective was to evaluate the effect of some forms of corporate governance on abnormal stock returns to see whether these variables make any devaluation and negative returns in the market or not. Methodology: The methodology was based on the application of panel data and testing the hypotheses through the analysis of multiple regression. Results: The results obtained from 71 companies listed on Tehran Securities Exchange from 2007 to 2013 represented a significant negative relationship between board outside directors and abnormal returns. It was also revealed that there is a significant relationship between audit quality and abnormal return. Conclusion: Finally, training managers and stakeholders can help the implementation of proper corporate governance. Shareholders should be aware of the benefit of the existence of independent outside directors on the board, the audit committee, institutional investors etc. which are among the standards of corporate governance.