International Research Journal of Finance and Economics ISSN 1450-2887 Issue 56 (2010) © EuroJournals Publishing, Inc. 2010 http://www.eurojournals.com/finance.htm An Investigation of the Relationship between Board of Directors´ Bonuses and Economic Performance Evaluation Models (Case Study: Tehran Securities Exchange) Mohammad Namazi Professor of Accounting, Shiraz University, Iran, College of Economics Management & Social Science, Department of Accounting E-mail: mnamazi@rose.shirazu.ac.ir Tel: +98 711 6460520; Fax: +98 711 6460520; Mobil: +98 917 118 4375 Hossein Ghorbani M. A. of Accounting, Shiraz University, Iran E-mail: ghorbani@dashiacpa.com Tel: +98 912 372 7440 Abstract The main purpose of this study is responding to the question: "which economic performance criteria posit a significant relationship with the board of director's bonuses, and what is the effect of the industry in this evaluation?" For this purpose, on the basis of the agency theory concept, required data were collected from all qualified firms accepted in Tehran Securities Exchange (TSE) for 2003 to 2007. Then, four basic hypotheses for investigating the statistical relation between board of directors´ bonus amounts and economic value added; board of directors´ bonus amounts and market value added; relative changes in bonus and economic value added growth; and relative changes in bonus and market value added growth, were specified. Consequently, by utilizing adjusted R square, analysis of variance and a linear regression model, the relationship between boards of directors´ bonuses of the selected firms with economic performance evaluation measures were investigated. Each of these hypotheses was examined at the level of selected industries as secondary hypotheses. The results of the research at the level of all corporations demonstrate that, only the relationship between the market value added and board of directors bonus amount is significant. Similarly, examining hypotheses at the level of investigated industries, suggest that there is a stronger correlation between board of directors´ bonus amounts and the market value added in each industries. Furthermore, by substituting relative changes in the board of directors' bonus for the bonus amounts, the results of the hypotheses were weakened, in such a way that would specify there is not any significant relationship between relative changes in board of directors´ bonuses with economic value added and market value added growth. Keywords: Tehran Securities Exchange (TSE); agency theory; board of directors' bonus; Economic Value Added (EVA); Market Value Added (MVA); economic performance evaluation models