Investigation of the Effects of Ownership Structure on Firms Value: Evidence from Tehran Stock Market

Document Type : Research Paper

Authors

1 Associate Prof., Faculty of Management, University of Tehran, Iran

2 Student University of Tehran, Iran

3 Associate Prof. in Urmia University, Iran

4 Ph.D.in Finance, University of Tehran, Iran

Abstract

Privatization advocates believe that transfer to private sector increases firm’s performance and value, business environment, and therefore economic growth and welfare improves. In this research, by using the 70 accepted firms in the Tehran Stock Exchange for the period of 2005 to 2009, we investigate the effect of firm’s ownership structure on their value by applying Generalized Method of Moments (GMM) and Generalized Least Squares (EGLS) methods of estimations. Ownership structure is divided into four categories including: state ownership, corporate ownership, institutional ownership and individual ownership. We use Tobin’s Q ratio as the value criterion. Kao cointegration test results confirm Long-run relationship among variables under investigation. Estimated results also show positive and significant effect of institutional and corporate ownership and don’t confirm the effect of individual ownership on firm’s value and confirm efficient monitoring hypothesis.

Keywords

Financial Research Journal
Volume 15, Issue 1 - Serial Number 1
Spring & Summer
September 2013
Pages 129-148

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