Corporate governance, product market competition and firm performance: evidence from Iran

Abstract

Purpose

The purpose of this study is to investigate the effect of product market competition and corporate governance on firm’s management performance in the Tehran Stock Exchange market. According to the research literature, the governance mechanisms used in this study consist of ownership structure, structure of the board of directors and capital structure. In addition, Herfindahl–Hirschman Index and market size were used to measure the product market competition.

Design/methodology/approach

This study used one selected sample among the firms in the capital market of Iran from 2004 to 2012.

Findings

The results of this study indicated that there is a significant relation among the major governance mechanisms (including ownership concentration, independence of the board of directors and debt ratio) and product market competition and management performance. The findings of this study also showed that product market competition is effective on the relation between corporate governance and the performance, and this is what has been ignored in most of the conducted studies.

Originality/value

In general, the results of this study supported the idea that product market competition is effective on implementation and efficiency of governance mechanisms.

Citation

Moradi, M., Bagherpour Velashani, M.A. and Omidfar, M. (2017), "Corporate governance, product market competition and firm performance: evidence from Iran", Humanomics, Vol. 33 No. 1, pp. 38-55. https://doi.org/10.1108/H-10-2016-0075