An Investigation on the Conflict of Interests of Bank Shareholders Using the Corporate Governance Approach

Navabi Moghadam, Zeynab; Zare, Ali; Yousefi Sadeghloo, Ahmad; Jamali, Jafar

doi:10.29252/jlr.2021.185115.1659

An Investigation on the Conflict of Interests of Bank Shareholders Using the Corporate Governance Approach

Document Type : Original Article

Authors

zeynab navabi moghadam ¹

ali zare ²

ahmad yousefi sadeghloo ³

jafar jamali ⁴

¹ Private Law of Islamic Azad University, North Tehran Branch

² Professor assistant of private Law department, law and political science faculty, Science and research of Islamic Azad University

³ Faculty of Law, Islamic Azad University, Science and Research Branch, Tehran

⁴ Faculty of Law, Islamic Azad University, Tehran Electronic Branch

10.29252/jlr.2021.185115.1659

Abstract

Private Banks are established in Iran with the legal nature of public joint-stock companies and public joint stock cooperatives. Therefore, the realization of conflict of interests is inevitable in its nature. This problem must be treated otherwise, it will not be long before the business falls into a state of stagnation and eventual liquidation. This paper seeks to identify the types of conflict of interest that may arise between major shareholders, managers and other stakeholders. The special legal relationship that exists between managers and shareholders is one of the most important causes of conflict of interest, known as the agency crisis. But a good solution must be able to resolve these conflicts and achieve the specific goals of the banks in this way. Corporate governance has been suggested as the most appropriate solution for this purpose. Examining the corporate governance, it was found that this governing body can cover the supervision more confidently with tools such as self-supervisory or other supervisory, by creating audit committees from inside or outside the bank and also by adding non-executive managers from outside the company. In this way, it will help to resolve these conflicts in private banks.

Keywords

Bank

Conflict of Interest

Corporate Governance

Major Shareholders

Managers

Subjects