The Role of Corporate Governance in Preventing Bankruptcy: a Case of Tehran Stock Exchange

Abstract

The aim of this study is to investigate the effects of corporate governance mechanisms in preventing the bankruptcy of companies listed in Tehran Stock Exchange. For this purpose, corporate governance mechanisms, including institutional ownership, non-executive members of the board, CEO dual responsibility and free float stock are determined as independent variables and Bankruptcy based on the Spring ate model is determined as the dependent variable. The Spring ate model was used to evaluate institutional ownership, non-executive members of the board, CEO duality and free-floating share. The findings have mostly supported the hypothesis during the study period. Institutional ownership and non-executive board members have negative and free-floating shares have positive relationship with bankruptcy. Our model did not find a significant relationship between CEO duality and bankruptcy. Although, we can't rule out the possibility of any effects CEO duality might have.