Impact of Corporate Governance Measures on Stock Price Crashes of Listed Companies in Tehran Stock Exchange

The aim of this study is to investigate the effect of corporate governance measures on stock price crashes of listed companies in Tehran Stock Exchange. The four mechanisms of corporate governance in our study are: ownership structure, accounting transparency, board structure and processes, and CEO duality. In this paper this purpose nine hypotheses are developed and data on the 99 companies listed in Tehran Stock Exchange for the period of 2005 to 2014 are analyzed. A regression model using panel data with fixed effects approach, incorporated to test hypotheses. The findings indicate that the concentration of ownership measure of corporate governance has significant positive impact and institutional ownership, management ownership, board independence and duality of CEO has a significant negative impact stock price crashes. Also, the results show that the CEO duality and accounting transparency has no significant influence on stock price crashes. In additional analysis we find that these effects are asymmetric, and they are stronger in less competitive with higher uncertainty industries (where governance as a monitoring mechanism is more important).