The Relation between Corporate Governance Quality and Stock Return Volatility

The present study aims to investigate the relation between corporate governance quality and stock return volatility using a comprehensive index consisting three general sub-indices including board composition, shareholder rights and information transparency. Our sample includes 96 firms listed in Tehran Stock Exchange during 2010-2014. The research method is multivariate regression model based on panel data, and the results indicate that stock return volatility has a significant negative relation with board composition and information transparency. However, no significant relation has been found between stock return volatility and shareholder rights. The results of this study not only fill the void of research in this area, but pave the way for directors, policy makers and other stakeholders to make better decisions.