Relationship Between Corporate Governance and Financial Performance

Corporate Governance is a set of policies, methods and processes that are carried out for supplying the interests of the firm's stakeholders. The aim of Corporate Governance is increasing the certainty coefficient of the firm's activities and management policies in connection to shareholders and all of the stakeholders’ interest. Therefore, it can be expected that there might be a relationship between Corporate Governance and financial performance. This research is also seeking for an answer to this question that "Is there a relationship between the corporate governance with different indexes of financial performance in Iran? In this research 80 sample companies listed in Tehran Security Exchange is selected. In addition nineteen mechanisms of corporate governance which are classified into seven groups have been selected and analyzed using fourteen indexes of financial performance that are classified into six groups. The results indicate that from seven general groups of effective corporate governance mechanisms, five factors correlates with a number of financial performance indexes. Additionally based on our results, corporate governance system in Iran has more features with indigenous systems rather than endogenous systems.