This study examines the impact of agency costs on firm performance of listed firms in Tehran Stock Exchange. With this aim, main hypothesis and six sub-hypothesis have been designed and tested, with the selection of 73 firms listed in Tehran Stock Exchange during the 5-years period, 2006 to 2010. In this study, three criteria were used including operating expenses to sales ratio, asset turnover to sales ratio and Q-Tobin ratio to measure agency costs and two criteria such as return on assets

more »

... return on capital were implemented to measure firm performance. Results of statistical analysis showed that there is a significant relationship between agency costs and firm performance indicating that there are some evidences about verification agency theory in Tehran Stock Exchange.