Management Research Review, Volume (43), No (9), Year (2020-5)

Title : ( Management stock ownership and corporate debt: evidence from an emerging market )

Authors: Shayan Farhangdoust , Mahdi Salehi , homa molavi ,

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Purpose – The purpose of the present paper is to examine the trade-off relationship between managerial ownership and corporate debts and whether this relationship is moderated by ownership structure and corporate tax rates, particularly in a transition and emerging market whose unique institutional characteristics considerably differ from those prevailing both in the West and East markets. Design/methodology/approach – This research is semi-empirical in terms of method and practical in terms of purpose. The authors test their hypotheses by using simultaneous equations system methodology with two- and three-stages least squares regression (2SLS and 3SLS) and panel data technics on a sample of 952 listed companies on the Tehran Stock Exchange during 2011-2018. Findings – The findings indicate that, contrary to the current line of research, there is no trade-off relationship between managerial ownership and debt concerning the reduction of agency costs. Likewise, the study finds no convincing evidence that either the controlling shareholder or the corporate tax rate could influence or moderate this interrelationship. The conjecture lies in the fact that the fundamental environmental variations between the Tehran Stock Exchange and the institutional assumptions underpinning the Western models have led to the formation of such unexpected results. Research limitations/implications – The implications drawn from this study are constrained by two primary limitations. First, the present study is conducted in an Iranian setting; therefore, the data used for the study only contain companies listed on the Tehran Stock Exchange. The utilization of listed companies on the Tehran Stock Exchange is likely to affect the generalizability of the study in an international context. Second, in this study, we were unable to extend the sample time period because of some major deficiencies in the Tehran Stock Exchange library and its supplementary software. The usage of an extended time period could have provided more generalizable results. However, extended time period, per se, may impair the validity of the results as well. Originality/value – Because the fundamental institutional assumptions underpinning the Western and even East Asia capital structure models are not valid in the institutional environment of Iran, the findings of this study could provide substantial implications for the understanding of agency costs and capital structure literature. These significant institutional and ownership differences are the factors affecting firms’ leverage and capital choice decisions. Indeed, this study has laid some groundwork upon which a more detailed evaluation of the Iranian firms’ capital structure could be based. In addition, the examination of such relations may provide the ground for sound decision-making by various interested users of financial and accounting information.


, gency costs, Tehran Stock Exchange, Ownership, Capital, Capital structure, Managerial ownership, Other management-related topics, Corporate tax rate
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author = {شایان فرهنگ دوست and Salehi, Mahdi and Molavi, Homa},
title = {Management stock ownership and corporate debt: evidence from an emerging market},
journal = {Management Research Review},
year = {2020},
volume = {43},
number = {9},
month = {May},
issn = {2040-8269},
keywords = {gency costs; Tehran Stock Exchange; Ownership; Capital; Capital structure; Managerial ownership; Other management-related topics; Corporate tax rate},


%0 Journal Article
%T Management stock ownership and corporate debt: evidence from an emerging market
%A شایان فرهنگ دوست
%A Salehi, Mahdi
%A Molavi, Homa
%J Management Research Review
%@ 2040-8269
%D 2020