The effect of adjusting the managersʹʹ rewards with firm benefits on firmsʹʹ stock return

The aim of the present research is to study the effect of adjusting the benefits of managers with those of the firms on their stock return. This research has been carried out in the statistical population of the firms accepted in Tehran Stock Exchange during the years between 2007 and 2011 among 160 active companies there as our statistical sample. Companies which have paid rewards to the board of directors during the study period were categorized as firms convergent with the benefits for the managers and owners and the group which didnʹt pay any reward for the board of directors is categorized as firms not in line with the benefits of managers and owners. Based on the research findings, the average return of companies convergent with the benefits of managers and owners is meaningfully different from those of other companies. Also there is a meaningful relationship between the reward paid to board of directors and firmsʹ stock return. In other words, companies which have had a higher stock return, have paid more rewards to the board of directors.