Document Type : Original Research Paper

Authors

• A. Pakmaram ¹
• B. Lotfi ²

¹ Department of Accounting, Islamic Azad University, Bonab Branch, East Azarbaijan, Iran

² Department of Executive Management, Islamic Azad University, Bonab Branch, East Azarbaijan, Iran

Abstract

The weak governance of companies such as Enron and WorldCom and the spectacular crash of the stock markets at the beginning of this century have led to a rethinking of the corporate governance debate. The logic of corporate governance generally suggests an alternative perspective and the focus of governance is to create added value for a large number of organizational stakeholders. On the other hand, risk is one of the important indicators in the evaluation of the economic unit, which plays a central role in many financial decisions, securities valuation patterns, methods of evaluating capital plans, etc. This study investigates the relationship between corporate governance and the performance and risk of insurance companies admitted to the Tehran Stock Exchange. In this research, from 4 corporate governance indicators, including the size of the board of directors, the composition of the board of directors, dual duties of the CEO, and the concentration of ownership, as well as from 2 performance evaluation criteria, including the rate of return on assets and equity, and 2 company risk evaluation criteria, including commercial and financial risk. Used. The current research is practical in terms of its purpose and in terms of methodology, it is of the type of post-event causal correlation research. The statistical population of the research is the insurance companies accepted in the Tehran Stock Exchange, with the systematic elimination sampling method, 18 companies were included in the statistical sample of this research during 7 years (88 companies in total). The time frame of the research includes the years 1386 to 1392. Multiple linear regression and ordinary least squares method were used to test the formulated hypotheses. The findings of the research show that there is a positive relationship between the composition of the board of directors and financial performance in both dimensions (return on assets and equity), and there is a negative and significant relationship between the composition of the board of directors and risk in both dimensions (financial and commercial risk). A negative and significant relationship is also observed between the size of the board of directors and the rate of return on assets.

Keywords

• Corporate Governance
• business risk
• Financial risk
• evaluate performance
• Insurance Companies