Corporate sustainability and its effect on financial stability and capital adequacy of banks listed in Tehran stock exchange: the moderating role of institutional ownership

Taheri, Mandana; ,

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year 19, Issue 69 (12-2026)

JMBR 2026, 19(69): 515-548

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Corporate sustainability and its effect on financial stability and capital adequacy of banks listed in Tehran stock exchange: the moderating role of institutional ownership

Mandana Taheri ^*¹

1- Allameh tabataba'i university

Abstract: (88 Views)

Objective: Nowadays, financial stability and capital adequacy of banks significantly influence their intermediation capacity to efficiently mobilize and allocate resources for investment in infrastructure projects. Examining the financial stability and capital adequacy of banks, along with the key driving factors affecting them, is essential for understanding the resilience of the banking sector. One of the influential factors in this regard is corporate sustainability, as it can affect a firm’s financial performance by reducing costs, enhancing reputation, and creating competitive advantage. In the absence of theoretical evidence in Iran, the purpose of this study is to investigate the impact of sustainable corporate management on the financial stability and capital adequacy of banks listed on the Tehran Stock Exchange and Iran Fara Bourse, with an emphasis on the moderating role of institutional ownership.
Method: To achieve the research objectives, data related to 20 banks during the years 2012 to 2022 were collected from their financial statements and other reports available on the Codal system, and were used as the basis for analysis. The data analysis and hypothesis testing were conducted using multivariate regression techniques in EViews software.
Findings: The results show that banks' engagement in activities aimed at enhancing corporate sustainability significantly strengthens their financial stability and reduces their risk through improved capital adequacy. Furthermore, the findings indicate that institutional ownership significantly reinforces the effect of sustainable corporate management on the financial stability and capital adequacy of banks.
Conclusion: Sustainability performance enables organizations to reduce financial and credit risks by decreasing information asymmetry, supporting employees, and maintaining long-term relationships with stakeholders, thereby enhancing the efficiency of resource mobilization and allocation. Institutional shareholders, through their resources and ability to influence and monitor companies and managers, can help align the interests of managers and stakeholders. The efficient monitoring hypothesis suggests that greater investment by institutional shareholders leads to more effective oversight, which likely resolves conflicts and disagreements arising from agency issues. Institutional investors supervise firms both implicitly—through information gathering and pricing of managerial decisions—and explicitly—by directing corporate practices.

Article number: 3

Full-Text [PDF 1271 kb] (37 Downloads)

Type of Study: Empirical Study | Subject: Financial Institutions and Services (G2)
Received: 2025/09/2 | Accepted: 2026/02/1 | Published: 2026/10/17

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