Effect of political management on the relationship between productivity and the cost of equity : Test of Political Economy Theory

Document Type : Original Article

Authors
Mohamadreza Mahdifard 1
Ramezanali Royayee 2
1 Ph.D Student, Department of Accounting, Tehran Science and Research Branch, Islamic Azad University
2 Assistant Professor, Department of Cultural Affairs Management, Tehran Science and Research Branch, Islamic Azad University
Abstract
This study is in the framework of theory of political economic and aims to analyze the effect of political management on the relationship between productivity and the cost of equity(COE) for company owners in Tehran`s stock exchange center. Companies in this study are divided into two groups: Companies with political management sovereignty and other companies. In this study, it is believed that political management becomes the ruler institution whenever the company`s main stock holders who own at least ten percent of the whole stock. The research method is relational with multi-variables regression, and panel analysis is used in order to analyze the models. In a seven year period from 2006-2012, the studies have shown that political management is highly effective to the relationship between productivity and COE, and if the political management increases in a company, the relationship between productivity and COE increases too. This research  reveals that there isn’t relationship between political management and COE. Therefore it proves the effects of the study of using theory of political economy on the behavior of financial variables.
Keywords
Political management
Productivity
The cost of equity
Political Economy