THE EFFECT OF CORPORATE GOVERNANCE FACTORS ON CASH FLOW RESULTING FROM OPERATING ACTIVITIES AND FIRM FINANCING

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1 An Open Access, Online Inernaional Journal Available a Research Aricle THE EECT O CORPORATE GOVERNANCE ACTORS ON CASH LOW RESULTING ROM OPERATING ACTIVITIES AND IRM INANCING * Zahra Poorzamani and Somayeh Khademi Deparmen of Accouning, Cenral Tehran Branch, Islamic Azad Universiy, Tehran, Iran *Auhor for Correspondence ABSTRACT Corporae governance creaes a framework o direc and conrol economic eniies effecively, efficienly, and appropriaely in order o maximize shareholders' benefis. Also due o he fac ha cash is considered as one of he mos imporan asses of a business un he invesors, crediors, and oher beneficiaries consider he capabiliy of a business eniy in creaing and increasing cash very imporan in assessing i. The presen research is going o deal wih he effec of corporae governance facors on cash flow resuling from operaing and financing aciviies in firms enlised in Tehran Sock Exchange. In his research we have invesigaed abou 193 firms enlised during he ime period beween 2007 and The saisical mehod used was panel daa mehod. To es he hypoheses we have used a muliple variable linear regression model. Research findings showed ha here has no been a meaningful relaionship beween corporae governance facors and cash flow resuling from f inancing aciviies and in capial marke in Iran corporae governance facors did no have an imporan effec on cash flows resuling from financing. Also here has been a meaningful relaionship beween corporae governance facors and cash flows resuling from operaing aciviies and in capial marke in Iran corporae governance facors have had a very imporan role in cash flows resuling from operaing aciviies. Keywords: Insiuional Invesors, Major Shareholders, Board Size, Cash low INTRODUCTION The collapse of big companies such as Enron, WorldCom, Adelph Parmala, Xerox, ha caused losses for many invesors and beneficiaries and was resuled from weak corporae governance sysems ended wih over-emphasis on he necessiy of promoion and modificaions of corporae governance inernaionally. ollowing he collapse of Enron and oher similar cases resuled in haling reacions on he par of many counries worldwide. In America Sarbanes Oxely law was approved in July 2002and was obligaed from he sar of 2004 (Rezaee and Pir 2011). irms' leadership sraegy ranslaed ino corporae governance in Iran is considered as one of he mos imporan issues regarding he desirable conrol of firms in Iran by managemen. Economic cooperaion and developmen organizaion has defined leadership sysem as: "he se of relaions beween adminisraive managemen, board, shareholders and oher beneficiaries". irms' leadership framework should necessarily prepare he ground for promoing efficien and ransparen markes in cooperaion wih legislaion's governance. Also i should suppor sockholders o access heir equiy. A very imporan aspec of corporae governance is o prepare informaion for inflow of capial resources ino he company in he wo forms of issuing socks and gaining credis. Corporae governance framework in a company should recognize benefi supply of firm in order o formalize he benefis of all beneficiaries and absorb heir co-operaions for long-erm success of he firm. Transparency, as one of corporae governance goals, would be aained hrough sudying financial resuls of he company by using accouning financial saemens ha show firm's financial performance and posiion. Cash flow saemen, as one of elemens in financial saemens, is considered as one of he mos efficien repors o reflex he performance of business unis in cash and i reflecs he required informaion regarding he creaion and consumpion of cash for financial saemens' users. This repor supplies measuremen fundamenals and financial flexibiliy as one of he main ools along wih oher financial saemens. Cash flow saemens are also used as a crierion o assess fuure cash flows. Also his repor Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1629

2 An Open Access, Online Inernaional Journal Available a Research Aricle can be used o assess he previous predicions of cash flows in business unis ha are realized. The analyses of decisions made based on hese predicions, sudying he probable deviaions, and conclusions abou he correcness and efficacy of previous decisions are very useful (Mahd 2002). The Theoreical oundaion of his Research Corporae guidance sysem is a reacion owards agency problem ha is resuled from he isolaion of ownership from managemen. Unil 1970s nobody paid aenion o firm's leadership issue srucure, when Jensen & McLing posed agency heory and benefi conroversy. Based on agency heory here is a poenial conroversy beween benefis of shareholders and managemen and managers seek o gain maximum benefis hrough shareholders and hese benefis may conradic wih shareholders' benefis. According o he definiion posed by Jensen & McLing, agency relaionship is a conrac based on which he employer or owner appoins an agen or a represenaive and leaves decision making o him. In agency relaions, he goal of owners is o maximize wealh and hus conrol he acions of agen o achieve his goal and assess his performance. Afer agency heory was posed, agency relaions affeced differen issues in financial lieraure broadly and gradually and specifically afer he emergence of financial scandals and bankrupcy of firms and misuses and financial frauds occurred a he lae 20 h cenury, corporae governance became he focus of aenion and made i more necessary o conrol and supervise managers by shareholders. Therefore, new approaches and mehods were posed o assess performance and accommodae he benefis of shareholders and managers and managemen based on value and maximizing shareholders' wealh found a new saus in financial lieraure and finally corporae governance principles and approaches were developed (Eivazloo and Sadegh 2008). Corporae governance creaes a framework o direc and conrol economic eniies effecively, efficienly, and properly o maximize he benefis of sockholders. This sysem is creaed and reinforced o suppor and aain righs and benefis of all invesors and sockholders in he company and reduce he benefi conroversy among managers and shareholders. Corporae governance presens a legal and regulaory framework o idenify he relaions and responsibiliies among sockholders, board members, and oher beneficiaries o guaranee he required compeiive performance o deermine he righness of aciviies and make sure abou observing he righs of beneficiaries and presening supervision and conrol crieria and mechanisms o conrol managers' aciviies and require hem o respond abou heir aciviies pracically. Corporae governance conrols audi commiee, managers' composiion, audiors' independence, ownership srucure, conrol and major shareholders and following ha o esablish equilibrium among economic goals and o make sure he convergence of individual goals and public ones. Research has shown ha corporae governance can resul in improving financial reporing qualiy, improving adminisraive issues, ransparency, and responsiveness (Eivazloo and Sadegh 2008). inancial saemens form he main par of financial reporing process. inancial saemens' users are broad coninuum hrough which he supply of cerain informaion is impossible o be done hrough financial saemens and hus hey emphasize on join needs (Islam 2010). Cash flow saemen is one of fundamenal financial saemens such as he mos efficien repors for reflecing business unis' performance in cash and reflecs he required informaion regarding he creaion and consumpion of cash. This repor supplies measuremen fundamenals and financial flexibiliy as one of he main ools along wih oher financial saemens. Cash flow saemens are also used as a crierion o assess fuure cash flows. Also his repor can be used o assess he previous predicions of cash flows in business unis ha are realized. The analyses of decisions made based on hese predicions, sudying he probable deviaions, and conclusions abou he correcness and efficacy of previous decisions are very useful (Mahd 2002). Cash is one of imporan and criical resources in every profi uni and creaing balance beween accessible cash and cash needs is considered as he mos imporan facor in economic safey in each benefi uni. Cash eners a profi organizaion hrough normal operaions and oher financing sources and i is used in adminisering operaions, earning paymens, deb repaymens, and profi uni developmen, managemen decision making reflecions abou shor-erm and long-erm operaing programs and Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1630

3 An Open Access, Online Inernaional Journal Available a Research Aricle financing and invesing invesmen. The abiliy and accessibiliy of any profi uni o cash is he base of many decision making and judgmens abou he fuure of he uni. In oher words, informaion relaed o inflow and ouflow of cash in a profi uni is fundamenal in many decision makings and judgmens of invesors, crediors, and some oher groups using financ ial informaion. The invesors and crediors consider i imporan o pay aenion o esimaes of fuure cash flows specifically common operaions and financing aciviies and invesmen on cash flows (Dasgir and Khodabandeh, 2010). Research Lieraure Bradshaw e al., (2006) concluded in heir research eniled: "he relaionship beween financing aciviies, analyss' predicion, and reurn on sock" wihin a 30 years period ha here is an inverse relaionship beween ne cash relaed o each of financing aciviy caegories, sock issuing, borrowing and reurn on sock and also wih firm profiabiliy. The innovaion of his research is o use cash flow saemen o know abou financing and his resuls in he way o hink ha i is an absoluely cash approach and oher changes in capial srucure such as capial increase hrough claims, capial increase hrough accumulaed earnings and changing he deb o capial were no aken ino consideraion. In his research we have concurrenly invesigaed abou wo inappropriae pricing and wealh ransfer hypoheses. Chi e al., (2007) sudied he relaionship beween corporae governance and firm's marke value hrough creaing an ownership index in firms in Hong-King. They concluded ha firms' marke value is relaed wih corporae governance index posiively and firms wih good corporae governance accompany increased value added. Chung e al., (2009) sudied he experimenal relaionship beween corporae governance and sock marke liquidaion. They found ou ha firms wih beer corporae governance have less difference beween proposed and sold sock price; have higher marke qualiy index; and he probabiliy of exchanges based on final informaion is less among hem. Addiionally, hey showed ha changes in liquidaion crieria have a meaningful relaionship wih changes in corporae governance during ime pass. Probably firms reduce informaion asymmery hrough using corporae governance sandards and increase sock liquidaion hrough i. Amir (2005) showed ha here is a meaningful relaionship beween operaional cash flow and invesmen aciviies and reurn on sock. Also here is no a meaningful relaionship beween financing cash flow and reurn on sock. Daryaee e al., (2011) seleced a sample comprising 70 firms enlised in Tehran Sock Exchange and concluded ha here is a negaive and meaningful relaionship beween corporae governance rae and liquidaion rae in a meaningfulness level of %95. Khodadadi and Talker (2012) sudied abou he effec of corporae governance characerisics such as ownership concenraion, insiuional invesors, governmenal ownership, managerial ownership, he dualiy of managing direcor's duies, and he percenage of oher members of board on performance and value of firms in bourse and concluded ha ownership concenraion and governmenal ownership and firms' values have posiive and meaningful relaionships. The invesor has a posiive relaionship wih firm value and a negaive relaionship wih firm performance. CEO dualiy duy has had a negaive and meaningful relaionship wih firm value bu i did no have a meaningful relaionship wih firm performance. Also corporae governance srucure including all srucural characerisics had a posiive and meaningful relaionship wih firm value and is performance. Research Hypoheses In he presen research and based on lieraure regarding he facors of corporae governance and heir effecs on cash flows resuling from operaing and financing aciviies of firms and also o respond he main research quesion and o achieve he research goals, he following hypoheses were devised. Major and Minor Hypoheses irs main hypohesis: Corporae governance marke mechanisms affec cash flows resuling from financing. 1-1-The sock raio of insiuional shareholders affecs cash flows resuling from financing. Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1631

4 An Open Access, Online Inernaional Journal Available a Research Aricle 1-2-The sock raio of major shareholders affecs cash flows resuling from financing. Second main hypohesis: Corporae governance managerial mechanisms affec cash flows resuling from financing Board size affecs cash flows resuling from financing The raio of members no on duy o board members affecs cash flows resuling from financing The isolaion of managing direcor's pos and board head affecs cash flows resuling from financing. Third main hypohesis: Corporae governance marke mechanisms affec cash flows resuling from operaing cash flow The raio of insiuional shareholders' socks affecs operaing cash flow The raio of major shareholders' socks affecs operaing cash flow. ourh main hypohesis: Corporae governance managerial mechanisms affec cash flows resuling from operaing cash flow Board size affecs cash flows resuling from operaing cash flow The raio of members no on duy o board members affecs operaing cash flow The isolaion of managing direcor's pos and board head affecs operaing cash flow. MATERIALS AND METHODS Research Mehod To analyze daa we have used panel daa mehod and muliple variable linear regression models. Also Eviews7, SPSS 20, and Mini Tab 16 sofware were used. 193 firms were remained afer screening he populaion and all of hem were seleced as our research sample. Models relaed wih Tesing Hypoheses In his research and regarding he effec of corporae governance on operaing and financing aciviies, we have used he following models o es he hypoheses. Model (1): inance Model (2): Operaion 5 n 1 Gov 5 n 1 n n Gov Size 6 Size 6 Lev 7 Lev 7 MAT 8 MAT Dependen Research Variables inance : cash flow resuling from financing aciviies of firm i during year Operaion : cash flow resuling from operaing aciviies of firm i during year Gov : managerial variables (board size, board independence, managing direcor's and board head pos isolaion) and marke variables (he raio of insiuional shareholders, he raio of major shareholders) of corporae governance in year Size : size of firm i during year Lev : leverage raio of firm i during year MAT : deb mauriy dae of firm i during year Independen Research Variables Corporae Governance Marke Mechanisms Insiuional Shareholders (ISH) According o par 27 of aricle 1 of Sock Exchange Riles, insiuional shareholders are: 1) banks, 2) holding, invesing companies, pension fund, capial supply company, and invesing funds wihin Sock Exchange Organizaion, 3) any real or legal person who purchases more han %5 or more han 5 billion Rials of he nominal value of bonds being published, 4) governmenal and public organizaions and foundaions, 5) governmenal companies, 6) board members and publisher managers or persons who have 8 i i Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1632

5 An Open Access, Online Inernaional Journal Available a Research Aricle similar funcions. In his research, banks, companies, and any real or legal person who have had more han %5 of he socks published were considered as insiuional shareholders. Major Shareholders (LSH) Major shareholders are hose who can appoin a leas one member in board independenly. In his research hose shareholders who have had he required socks number o selec a leas one board member were considered as major shareholders. Corporae Governance Managerial Mechanisms Board Size In his paper he number of board members has been considered as a crierion o measure board size. The Raio of no in Charge Members o in Charge Board Members (NED) Based on he descripion given in he draf for leadership sraegies in Tehran Sock Exchange, a no in charge manager is someone working par-ime as board member who does no have any adminisraive pos. In his research he raio of managers no in charge has been achieved by dividing members no in charge in board o he oal number of board members. CEO Dualiy Duy (DUALIT) Based on he descripion given in he draf for leadership sraegies in Tehran Sock Exchange, i is no possible for a person o ac as boh managing direcor and as head of board. Duies, auhoriies, and responsibiliies of he managing direcor and head should be explicily defined and hey should no inerfere wih each oher. Conrol Variables irm Size (SIZE) To measure firm size usually we use crieria such as naural logarihm of firm's marke value, naural logarihm of oal asses, and naural logarihm of sales. In his sudy we have used naural logarihm of oal asses of he firm. Leverage (LEV) In his research we have used deb raio o measure he effecs of leverage which is calculaed hrough he raio of oal liabiliies o oal asses. LEV = DEBT / TA In his model we have, DEBT : oal debs of firm i a he end of year TA : oal asses of firm i a he end of year Mauriy of Debs (MAT) In order o conrol debs' mauriy effecs on cash flows resuling from operaing and financing aciviies, he variable deb mauriy has been enered ino he research model here. In his research he variable of mauriy of debs has been measured hrough he raio of previous debs o oal debs. RESULTS AND DISCUSSION Research indings Hypoheses es resuls were as follows: Table 1: Resuls of selecing a paern o esimae model P-Value Value of he es df saiic 0/0000 ) ( 2/389 0/ /355 Saiic of es 2 Type of es H Regarding he resuls of Limer es and since he amoun of P-Value of his es has been less han 0.05 (0.0000), he divergence of laiude from base has been approved and i would be necessary o use panel daa mehod o esimae he model. Also regarding he resuls of Hussmann's es, since he amoun of P- Value of his model has also been less han 0.05 (0.0004), his model should be esimaed by using fixed Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1633

6 An Open Access, Online Inernaional Journal Available a Research Aricle effecs mehod. In able 2, he resuls of model esimaion and also he resuls relaed o saisics and he presupposiions of classic regression have been represened. Table 2: Resuls of model 1 esimaion cash flows resuling financing aciviies :Dependen Variable company 1144yers :observaions P-Value Coefficien Variable 0/0000-4/173-0/2702 Consan 0/7493-0/319-0/0011 The sock raio of insiuional shareholders 0/6113 0/508 0/0069 The sock raio of major shareholders 0/8961 0/130 0/0005 Board _ Size 0/0582 1/896 0/0081 NED 0/3659-0/094-0/0039 DUALIT 0/0000 5/131 0/0222 SIZE 0/0114 2/534 0/0306 )LEV(Gearing raio 0/0022-3/073-0/0441 )MAT(Deb mauriies 0/3942R-squared 22/698 )0/0000( Jarque-Bera )P-Value( 3/068 )0/0000( )P-Value( 2/19 Durbin-Wason 2/911 Breusch-Pagan )0/0032( )P-Value( In sudying he overall meaningfulness of he model and regarding ha he amoun of probabiliy (P - Value) of saisic has been less han 0.05 (0.0000), we can approve he overall meaningfulness of he model wih %95 assurance. Also he idenificaion coefficien of his model showed ha %39.42 of changes in cash flows resuling financing aciviies of he companies could be idenified hrough variables enered ino he model. Also in invesigaing he presupposiions of he classic regression, he resuls of Jarque-Bera es showed ha he residuals of model esimaion did no have a normal disribuion in an assurance level of %95 in a way ha he amoun of probabiliy (P-Value) relaed o his es was less han 0.05 (0.0000). Therefore, regarding he high number of observaions and cenral funcion premise we can ignore he lack of normaliy of daa disribuion. Also due o he fac ha he amoun of probabiliy (P - Value) relaed o Breusch-Pagan es has been less han 0.05 (0.0032), he presence of divergence of residuals' variance is approved. In his sudy and o remove his problem we have used adjused leas squares mehod insead of common leas squares mehod in esimaion. Addiionally, since Durbin- Wason's es saisic is close o 2 (2.19), he independence of model residuals is approved. Inerpreaion of Resuls of Tesing irs Research Hypohesis Based on resuls presened in able 2, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'he raio of insiuional shareholders' is higher han 0.05 (0.7493). Thus, in an assurance level of %95, we can say ha here has no been a meaningful relaionship beween he raio of insiuional shareholders and cash resuling from financing and he minor hypohesis 1-1 is rejeced. Minor hypohesis 1-2: The raio of major shareholders affecs cash flows resuling from financing. Based on resuls posed in able 2, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'major shareholders' is also higher han 0.05 (0.6113). Thus, in an assurance level of %95, we can say ha here has no been a meaningful relaionship beween he raio of major shareholders and cash resuling from financing and he minor hypohesis 1-2 is rejeced. Therefore, regarding he resuls of minor hypoheses 1-1 and 1-2, we can conclude ha in an assurance level of %95, here has no been a meaningful relaionship beween corporae governance marke mechanisms and cash flows resuling from financing and in capial marke in Iran corporae governance Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1634

7 An Open Access, Online Inernaional Journal Available a Research Aricle marke mechanisms did no have an imporan effec on cash flows resuling from financing. Thus, he firs research hypohesis is rejeced in an assurance level of %95. Inerpreaion of Resuls of Tesing Second Research Hypohesis Minor hypohesis 2-1: Board size affecs cash flows resuling from financing. Based on resuls presened in able 2, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'board size' is higher han 0.05 (0.8961). Thus, in an assurance level of %95, we can say ha here has no been a meaningful relaionship beween board size and cash resuling from financing and he minor hypohesis 1-2 is rejeced. Minor hypohesis 2-2: The raio of no in charge managers o oal board managers affecs cash flows resuling from financing. Based on resuls posed in able 2, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'he raio of no in charge managers o oal board managers' is also higher han 0.05(0.0582). Thus, in an assurance level of %95, we can say ha here has no been a meaningful relaionship beween he raio of no in charge managers o oal board managers and cash resuling from financing and he minor hypohesis 2-2 is rejeced. Minor hypohesis 2-3: The isolaion of managing direcor and board head poss affecs cash flows resuling from financing. Based on resuls posed in able 2, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'CEO dualiy duy' is also higher han 0.05 (0.3659). Thus, in an assurance level of %95, we can say ha here has no been a meaningful relaionship beween he isolaion of managing direcor and board head poss and cash resuling from financing and he minor hypohesis 2-3 is rejeced. Therefore, regarding he resuls of minor hypoheses 2-1, 2-2, and 2-3, we can conclude ha in an assurance level of %95, here has no been a meaningful relaionship beween corporae governance managerial mechanisms and cash flows resuling from financing and in capial marke in Iran corporae governance managerial mechanisms did no have an imporan effec on cash flows resuling from financing. Thus, he second research hypohesis is rejeced in an assurance level of %95. Resuls of Tesing Third and ourh Research Hypoheses Table 3: Resuls of selecing a paern o esimae model 2 P-Value Value of he es Df saiic 0/0000 0/0000 ) ( 8 4/622 60/855 Saiic of es 2 Type of es H Regarding he resuls of Limer es and since he amoun of P-Value of his es has been less han 0.05 (0.0000), he divergence of laiude from base has been approved and i would be necessary o use panel daa mehod o esimae he model. Also regarding he resuls of Hussmann's es, since he amoun of P- Value of his model has also been less han 0.05(0.0004), his model should be esimaed by using fixed effecs mehod. In able 4, he resuls of model esimaion and also he resuls relaed o saisics and he presupposiions of classic regression have been represened Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1635

8 An Open Access, Online Inernaional Journal Available a Research Aricle Table 4: Resuls of model 2 esimaion cash flows resuling operaing aciviies :Dependen Variable company yers4411 :observaions P-Value Coefficien Variable 0/0000 8/067 0/8320 Consan 0/0029-2/987-0/0436 The sock raio of insiuional shareholders 0/6879-0/401-0/0061 The sock raio of major shareholders 0/0918 1/687 0/0120 Board _ Size 0/0347-2/114-0/0264 NED 0/0440 2/016 0/0141 DUALIT 0/0000-7/170-0/0489 SIZE 0/0000-5/360-0/1135 )LEV(Gearing raio 0/4960 0/681 0/0146 )MAT(Deb mauriies 0/6286R-squared 30/396 )0/0000( Jarque-Bera )P-Value( 10/151 )0/0000( )P-Value( 2/12 Durbin-Wason 1/960 Breusch-Pagan )0/0482( )P-Value( In sudying he overall meaningfulness of he model and regarding ha he amoun of probabiliy (P - Value) of saisic has been less han 0.05 (0.0000), we can approve he overall meaningfulness of he model wih %95 assurance. Also he idenificaion coefficien of his model showed ha %68.26 of changes in cash flows resuling operaing aciviies of he companies could be idenified hrough variables enered ino he model. Also in invesigaing he presupposiions of he classic regression, he resuls of Jarque-Bera es showed ha he residuals of model esimaion did no have a normal disribuion in an assurance level of %95 in a way ha he amoun of probabiliy (P-Value) relaed o his es was less han 0.05 (0.0000). Therefore, regarding he high number of observaions and cenral funcion premise we can ignore he lack of normaliy of daa disribuion. The disribuion of residuals is close o normal disribuion. Inerpreaion of Resuls of Tesing Third Research Hypohesis Minor hypohesis 3-1: The raio of insiuional shareholders' socks affecs operaing cash flows. Based on resuls presened in able 4, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'he raio of insiuional shareholders' socks' is less han 0.05 (0.0029). Thus, in an assurance level of %95, we can say ha here has been a meaningful relaionship beween he raio of insiuional shareholders' socks and operaing cash flows. Since regarding he negaive amoun of variable coefficien of insiuional shareholders ( ), he resuls gained showed ha here has been a reverse relaionship beween he raio of insiuional shareholders' socks and operaing cash flows in a way ha by increasing one uni of he raio of insiuional shareholders' socks, uni will be decreased in operaing cash flows. Thus, he hypohesis3-1 has been approved in an assurance level of %95 and his showed ha in capial marke in Iran he increase in he raio of insiuional shareholders' socks would have reducive effecs on operaing cash flows. Minor hypohesis 3-2: The raio of major shareholders affecs operaing cash flows. Based on resuls posed in able 4, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'he raio of major shareholders' is also higher han 0.05 (0.6879). Thus, in an assurance level of %95, we can say ha here has no been a meaningful relaionship beween he raio of major shareholders and operaing cash flows and he minor hypohesis 3-2 is rejeced. Therefore, regarding he resuls of minor hypoheses 3-1, and 3-2, we can conclude ha here has been a meaningful relaionship beween corporae governance marke mechanisms and operaing cash flows only Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1636

9 An Open Access, Online Inernaional Journal Available a Research Aricle beween he raio of insiuional shareholders and operaing cash flows and here has no been a meaningful relaionship beween he raio of major shareholders and operaing cash flows. Thus, he hird research hypohesis is approved regarding he raio of insiuional shareholders and i was rejeced regarding he raio of major shareholders. Inerpreaion of Resuls of Tesing ourh Research Hypohesis Minor hypohesis 3-1: Board size affecs operaing cash flows. Based on resuls presened in able 4, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'board size' is higher han 0.05 (0.0918). Thus, in an assurance level of %95, we can say ha here has no been a meaningful relaionship beween board size and operaing cash flows. However, since he amoun of probabiliy (P-Value) of saisic relaed o his variable is less han 0.1, we can say ha in an assurance level of %90, here has been a meaningful relaionship beween board size and operaing cash flows. Minor hypohesis 4-2: The raio of no in charge managers o oal board managers' affecs operaing cash flows. Based on resuls posed in able 4, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'he raio of no in charge managers o oal board managers' is less han 0.05 (0.0347). Thus, in an assurance level of %95, we can say ha here has been a meaningful relaionship beween he raio of no in charge managers o oal board managers' and operaing cash flows. Since regarding he negaive amoun of variable coefficien of he raio of no in charge managers o oal board managers' ( ), he resuls gained showed ha here has been a reverse relaionship beween he raio of no in charge managers o oal board managers' and operaing cash flows in a way ha by increasing one uni of he raio of no in charge managers o oal board managers', uni will be decreased in operaing cash flows. Thus, he hypohesis 4-2 has been approved in an assurance level of %95 and his showed ha in capial marke in Iran he increase in he raio of no in charge managers o oal board managers' would have reducive effecs on operaing cash flows. Minor hypohesis 4-3: The isolaion of managing direcor and board head poss affecs operaing cash flows. Based on resuls posed in able 4, he amoun of probabiliy (P-Value) of saisic relaed o he variable 'he isolaion of managing direcor and board head poss' is less han 0.05 (0.0440). Thus, in an assurance level of %95, we can say ha here has been a meaningful relaionship beween he isolaion of managing direcor and board head poss and operaing cash flows. Since regarding he posiive amoun of variable coefficien of he isolaion of managing direcor and board head poss (0.0141), he resuls gained showed ha here has been a direc relaionship beween he isolaion of managing direcor and board head poss and operaing cash flows in a way ha by increasing one uni of he isolaion of managing direcor and board head poss, uni will be increased ono operaing cash flows. Thus, he hypohesis 4-3 has been approved in an assurance level of %95 and his showed ha in capial marke in Iran he increase in he isolaion of managing direcor and board head poss would have increasing effecs on operaing cash flows. Therefore, regarding he resuls of minor hypoheses 4-1, 4-2, and 4-3, we can conclude ha here has been a meaningful relaionship beween corporae governance managerial mechanisms and operaing cash flows and in capial marke in Iran, corporae governance managerial mechanisms have had an imporan effec on operaing cash flows. Conclusion The goal of his research was o sudy abou he effecs of corporae governance facors on cash flows resuling from operaing and financing aciviies in firms enlised in Tehran Sock exchange. The experimenal evidences gained from hypoheses' ess showed ha corporae governance marke mechanisms and corporae governance managerial mechanisms did no have an imporan effec on cash flow resuling from financing. Also he resuls gained showed ha from among corporae governance marke mechanisms, here has been a meaningful relaionship beween he raio of insiuional shareholders and operaing cash flows bu in an assurance level of %95, here has no been a meaningful Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1637

10 An Open Access, Online Inernaional Journal Available a Research Aricle relaionship observed beween major shareholders and operaing cash flows. Addiionally, he findings showed ha in capial marke in Iran, corporae governance managerial mechanisms have had imporan effecs on operaing cash flows. Research findings showed ha here has no been a meaningful relaionship beween corporae governance facors and cash flows resuling from financing and in capial marke in Iran corporae governance facors did no have an imporan effec on cash flow resuling from financing. Also here has been a meaningful relaionship beween corporae governance facors and cash flows resuling from operaing aciviies and in capial marke in Iran corporae governance facors have had an imporan effec on cash flows resuling from operaing aciviies. Regarding he novely of his issue, here has no been any similar research o compare he resuls wih. REERENCES Azar Adel and Momeni Mansour (2010). Saisics and is Applicaion in Managemen, 14 h ediion (SAMT Publicaions) Tehran 1. Bradshaw M and Richardson SA (2006). The Relaion beween Corporae inancing Aciviies, Analyss,s orecass and Sock Reurns, Journal of Accouning an Economics Daryaee Abbasal Pakdel Abdollah and alah-e-mohammadi Narges (2011). The idenificaion of a relaionship beween corporae governance and sock liquidaion by using concurren equaions sysem. Journal of Accouning Researches Dasgir Mohsen and Rasaeeyan Amir (2012). The effec of some corporae governance ools on informaion asymmery regarding quarerly earnings announcemen by using vecor self-reurning. Journal of inancial Accouning and Audiing Eivazloo Reza and Sadeghi Mohsen (2008). Privaizaion and corporae organizaion. Bourse Organizaion, Research managemen, Islamic Developmen and Sudies. inancial Accouning Sandards Devising Commiee (2007). Accouning sandards in Iran. Journal NO. 160, Accouning and Audiing Researches Cener, audi organizaion. rancis B and Hasan I (2013). Corporae Governance and Invesmen-Cash flow Sensiiviy: Evidence from Emerging Markes, Journal of Emerging Markes Review Haghigha Hamid and Rahimi-e-Ashiani Amir (2005). Sudying he relaionship beween accouning variables and ne operaing cash flows, invesmen, and financing and reurn on socks. MA Disseraion, Mashad Universiy. Islami Gholsmhossein and Namdar Mohammad Hassan (2010). Opimal disclosure of firm performance, he adjusmen of income saemen and cash flow. Journal of Accounan. Jusin T Wang, Heibaollah Sami and Haiyan Zhou (2009). Corporae Governance and Operaing Performance of Chinese Lised irms. Available: Lin ZJ and Ming L (2009). The Deerminans of Audior Swiching from he Perspecive of Corporae Governance in China, Journal of Corporae Governance: An Inernaional Review 17(4) Moradzadeh Mahdi (2002). Cash flow saemen, Iran sandard compared wih naional sandard, Journal of Accounan 147 Year 17. Moradzadehfard Mahdi and Dindar-e-Yazdi (2010). Sudying he relaionship beween accouning conservaism and corporae governance. MA Disseraion, Deparmen of Economics. Rezaee arzin and Piri Abdollah (2011). The effec of corporae governance, capial srucure and liquidaion on firm s value. MA Disseraion, Islamic Azad Universiy, Ghazvin Branch. Technical Commiee of Audiing Organizaion (2007). Accouning Sandards (Journal 160), Audi Organizaion, firs ediion. Tehran Sock Exchange Company (2007). The guidelines for corporae governance. Approved by board members in Sock Exchange organizaion. Xia LH, Wang ZJ and Deng XL (2008). Ownership, Independen direcors, Agency coss and financial disress: Evidence from Chinese lised Companies, Journal of Corporae Governance 8(5) Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 1638