Effect of political ownership on the relationship between productivity and the cost of equity

Abstract

This study is in the framework of theory of political economic and aims to analyze the effect of political ownership on the relationship between productivity and the cost of equity for company owners in Tehran`s stock exchange center. Companies in this study are divided into two groups: Companies with political ownership sovereignty and other companies. In this study, it is believed that political ownership 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 ownership is highly effective to the relationship between productivity and the cost of equity, and if the political ownership increases in a company, the relationship between productivity and the cost of equity increases too. Therefore it proves the effects of the study of using theory of political economy on the behavior of financial variables.