International Journal of Management, Accounting and Economics
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Volume 5, No. 7, July 2018 Pages: 566 - 618
Role of Institutional Ownership Mechanism under the Effect of Price-to-Earnings Ratio on the Performance and Efficiency of Companies Listed in Tehran Stock Exchange
Tayyebeh Zarei
Corresponding author:
t368[dot]zarei[at]gmail[dot]com
Abstract:
In capital markets, corporate governance mechanisms are used as valuation criteria in dynamic markets to assess corporate value. The mechanisms concentrating on ownership structures, regulatory processes, and auditing try to improve corporate performance and to create value for stakeholders. The present research studied the effect of institutional ownership as ownership structure mechanism under price-to-earnings ratio on the performance and efficiency of companies listed in Tehran Stock Exchange in 92 sample companies over an 8-year period within 2006-2013. Analysis of research hypotheses show that there is no significant difference between abnormal return of companies with small and large institutional ownership, and low-, intermediate-, and high price-to-earnings ratios. Evaluation of research models over three regression models indicates that institutional ownership for companies with low price-to-earnings ratio has no effect on performance through assessed normal return, abnormal return, and net profit. Further, assessing three other regression models demonstrates that institutional ownership in companies with high price-to-earnings ratio also showed no effect on performance through normal return, abnormal return, and assessed net profit.
Keywords:
Ownership structure, institutional ownership, price-to-earnings ratio, normal return, abnormal return, net profit.
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