Evaluating the impact of open investment on creating economic added value with an emphasis on the characteristics of shareholding in line with general investment encouragement policies

Raei Ezabadi, Mohammad Ebrahim; Zorrie Zahraee, Seyed Mohammad

doi:10.30507/jmsp.2026.541829.2838

Evaluating the impact of open investment on creating economic added value with an emphasis on the characteristics of shareholding in line with general investment encouragement policies

Document Type : Research/Original/Regular Article

Authors

Mohammad Ebrahim Raei Ezabadi

Seyed Mohammad Zorrie Zahraee

Azad University

10.30507/jmsp.2026.541829.2838

Abstract

This study investigates the impact of reinvestment on Economic Value Added (EVA) and the moderating role of ownership structure in firms listed on the Tehran Stock Exchange from 2014 to 2023. Reinvestment, defined as retaining and reinvesting profits, is considered a key financial strategy for value creation. Data from 263 firms were analyzed using panel data and multivariate regression models in EViews. The results reveal that reinvestment has a significant negative effect on EVA, indicating that in Iran’s capital market, retained earnings do not necessarily create value and may even reduce firm performance. Contributing factors include inefficient resource allocation, bureaucratic complexity, currency volatility, and weak infrastructure. Ownership structure significantly moderates this relationship: in firms with dominant institutional ownership, the negative effect diminishes, while in firms with major individual ownership, it intensifies. The findings emphasize that reinvestment effectiveness depends on institutional factors, managerial decision-making, project selection, and corporate governance. Moreover, the results have direct implications for national investment policies: simply increasing investment is insufficient; regulatory reforms, business environment improvement, and enhanced transparency are essential to ensure optimal allocation of accumulated capital and sustainable economic growth.

Keywords

Reinvestment

economic added value

shareholding characteristics

Subjects