Investigating the Effect of Government Ownership on Return on Asset and Economic Value Added in Listed Companies of Tehran Stock Exchange (TSE)

Ali Taghavi Moghaddam, Sayeed Javad Habib Zadeh Baygi and Misam Vahediyan

International Journal of Empirical Finance, 2015, vol. 4, issue 5, 298-311

Abstract: Formerly, government economy was preferred to non-government economy. However, due to the occurrence of problems such as excessive bureaucracy, poor management system, the lack of a proper assessment system and work motivation, multiplicity of objectives, abuse of monopolies as well as inefficient supports, many countries resorted to private economy. This study aims at experimental assessment of the effect of government ownership on the stock return and economic value added in listed companies of Tehran Stock Exchange. The statistical population included listed companies of Tehran Stock Exchange from 2007-2013. Final sample comprised 1106 firm-year. In this study, return on assets (ROA), leverage, operating cash flow and firm size were used as control variables. To test hypotheses, stepwise linear regression was applied. The results indicated no significant correlation between stock return, economic value added and government ownership. The results also showed a significant and positive correlation between operating cash flow and ROA with stockreturn. But, no correlation was found between firm size and leverage with stock return. There was a positive and significant correlation between leverage and economic value added. However, no correlation of firm size, operating cash flow and ROA with economic value added was found.

Keywords: Government ownership; economic value added; return on assets (ROA); stock return (search for similar items in EconPapers)
Date: 2015
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