Evaluation of large shareholder's monitoring or tunnelling behaviour in companies accepted in Tehran Stock Exchange
by Sahar Mojaver Rostami
International Journal of Advanced Intelligence Paradigms (IJAIP), Vol. 23, No. 1/2, 2022

Abstract: Shareholders' wealth in the real world of finance is very important and focus on it has become very important in recent years. Although the purpose of each investment and consequently, the main purpose of each company has been maximising shareholder wealth but over the past decades, most companies have not paid enough attention to it. Ownership composition, particularly the ownership concentration of majority shareholders is one of the most important factors influencing on the control and managing companies. When large shareholders or internal shareholders like managers have the capacity to control the company, they may have some incentives to get private benefits. Given the importance of monitoring and behaviour of controlling shareholders, this study investigates the large shareholder's monitoring or tunnelling behaviour in companies accepted in Tehran Stock Exchange. To do so, 125 companies over the period of 2010 to 2011 (a total of 750 company years) are analysed using systematic elimination sampling method. Results show that there is a significant relationship between large shareholder's tunnelling behaviour and financial performance (return on equity and Tobin's Q indexes) in companies accepted in Tehran Stock Exchange, and this relationship is U-shaped.

Online publication date: Mon, 05-Sep-2022

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