Iranian Journal of Accounting, Auditing and Finance in the Islamic Environment

Iranian Journal of Accounting, Auditing and Finance in the Islamic Environment

Investigating moderating effect of corporate governance quality on the relationship between strategic deviation and investment inefficiency in the islamic capital market

Articles in Press

Document Type : Original Article

Authors
MohammadAli Sari 1
Abdollah Hosseinzadeh 2
Narges Abad 2
1 Assistant Professor, Department of Accounting, Mashhad Branch, Islamic Azad University, Mashhad, Iran
2 Azad Mashhad
10.22034/aafie.2026.555646.1079
Abstract
The aim of this research is to examine the relationship between strategic deviation and investment inefficiency and the moderating effect of corporate governance quality on this relationship in the islamic capital market. Managers of companies with high strategic deviation are likely to over-invest in order to attract customers and retain suppliers. Similarly, managers of deviating companies may increase capital expenditures and research and development costs to search for new customers and technologies, leading to investment inefficiency. Therefore, the first hypothesis of the research is that there is a positive relationship between strategic deviation and investment inefficiency. Additionally, corporate governance mechanisms help improve investment efficiency, and with an increase in corporate governance variables, companies will make more optimal investment decisions. Thus, the second hypothesis of the research is that corporate governance has an effect on the relationship between strategic deviation and investment inefficiency. Methodology: To test these hypotheses, data from 154 companies over the years 2014 - 2023. The research findings indicate that strategic deviation and investment inefficiency have a positive and significant relationship, and corporate governance strengthens this relationship. This finding highlights the role of external regulatory mechanisms in the Islamic capital market.
Iranian Journal of Accounting, Auditing and Finance in the Islamic Environment

Articles in Press, Accepted Manuscript
Available Online from 04 July 2026

  • Receive Date 26 October 2025
  • Revise Date 03 July 2026
  • Accept Date 04 July 2026
  • Publish Date 04 July 2026