Assessing the Performance Outcomes of Quasi-Oligarchic Corporate Governance in Iran’s Capital Market

Esmaiel  Salehi; Hasan  Valiyan; Mohammadreza  Abdoli; Mehdi  Eskandari

Authors

Esmaiel Salehi Department of Accounting, Sha.C., Islamic Azad University, Shahrood, Iran Author https://orcid.org/0009-0006-7930-7970
Hasan Valiyan Department of Accounting, Sha.C., Islamic Azad University, Shahrood, Iran https://orcid.org/0000-0002-3365-1593
Mohammadreza Abdoli Department of Accounting, Sha.C., Islamic Azad University, Shahrood, Iran Author https://orcid.org/0000-0002-8927-1231
Mehdi Eskandari Department of Accounting, Sha.C., Islamic Azad University, Shahrood, Iran Author https://orcid.org/0009-0000-5053-8480

Keywords:

Corporate governance, quasi, oligarchic governance system, ownership monopolization

Abstract

The purpose of this study was to assess the performance outcomes of quasi-oligarchic corporate governance in Iran’s capital market. The methodological nature of the study was mixed-methods. Accordingly, to achieve the analytical objectives of the research, a phenomenological approach was initially employed to identify propositional themes associated with the central phenomenon through interviews and open coding. Subsequently, the propositional themes were classified using a researcher-developed weighted checklist, thereby enabling the categorization of emergent concepts across the five dimensions of a paradigmatic model. Thereafter, to extend the identified consequences of the central phenomenon to the context of capital-market companies and to prioritize and determine the most central dimension resulting from the application of a quasi-oligarchic governance system in Iran’s capital market, interpretive ranking matrix procedures were employed. The study participants comprised 26 actors from the capital market and public finance sectors who, based on predetermined experiential adequacy criteria, possessed sufficient and relevant knowledge of the characteristics of governance systems in the capital market. These participants contributed to the collection of the research data. The findings derived from interviews with experienced market actors indicated the identification of 343 open codes, 55 contextual propositions, and 11 categories related to the characteristics underlying the formation of quasi-oligarchic governance systems in companies operating within industries affiliated with the institutional sector. These categories covered the full range of the phenomenon, from its causal conditions to the consequences of this anomalous occurrence in Iran’s capital market. “Transactions without changes in ultimate ownership and the creation of artificial prices,” abbreviated as (H_8), was identified as the most central dimension. It is expected that the expansion of unidimensional ownership structures in Iran’s capital market will result in the infringement of stakeholders’ rights due to the concealed, self-serving operational practices of such companies. The findings further indicate that external challenges constitute an integrated and purposive system influencing policymaking and directing transparent corporate governance practices, whereas internal challenges arise from anomalies associated with the opportunistic behavior of companies characterized by such governance structures. These conditions may ultimately lead to the violation of minority shareholders’ rights in favor of the majority controlling the administrative systems of these companies. Fundamentally, the proliferation of quasi-oligarchic governance practices reflects a form of acquisitive control through which, as a result of self-serving monopolistic arrangements, companies governed by such mechanisms attempt to selectively disclose their performance. In doing so, they prioritize interests that enable them to satisfy, to a greater extent, the demands and preferences of dominant power holders within the companies.

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