Title: Political economy of corporate governance: the case of Iran

Authors: Fakhroddin Mohammadrezaei; Norman Mohd-Saleh; Bahman Banimahd

Addresses: School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), 43600 Bangi, Selangor, Malaysia ' School of Accounting, Faculty of Economics and Management, Universiti Kebangsaan Malaysia (UKM), 43600 Bangi, Selangor, Malaysia ' Department of Accounting, Management and Accounting Faculty, Islamic Azad University – Karaj Branch, Karaj, Iran

Abstract: This study enriches the literature concerning the political economy of corporate governance (CG) and explains the characteristics of CG in Iran based upon the political economy model. Hence, we modify and extend the conceptual framework of the political economy of CG based on new evidence from Iran. In addition, to answer the research questions, this framework highlights the political connections of interest groups and political interventions as the principal issues relating to Iranian CG mechanisms. Moreover, it can be concluded that specific CG characteristics of the political economy in Iran, have a negative impact on the quality of CG, including state ownership, state board, state CEO, concentrated ownership, board and CEO alignment with controlling shareholders. The interpretative and predictive power of the conceptual framework of political economy of CG is promoted in this study at both the firm and macro levels. In addition, the framework can provide a basis to study CG mechanisms in countries with a governmental economy.

Keywords: political economy; corporate governance; interest group politics; Iran; political connections; interest groups; political intervention.

DOI: 10.1504/IJBGE.2012.051225

International Journal of Business Governance and Ethics, 2012 Vol.7 No.4, pp.301 - 330

Published online: 28 Dec 2012 *

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