Corporate Governance, Firm Characteristics and Firm Performance: Empirical Evidence from Vietnam.
Keywords:Corporate governance, firm characteristic, firm performance, Vietnam
The purpose of this research was to examine how corporate governance methods relate to the performance of companies in Vietnam. The study used a dataset of 85 manufacturing firms listed on the Ho Chi Minh City stock exchange (HOSE) and applied Random-Effect Model (REM) and the Feasible Generalized Least Squares Model (FGLS) method. We found that the performance of a firm is positively influenced by a CEO's age, and gender diversity in boards of directors (BOD). However, firm size and board size have a negative impact on firm performance. The research recommends that companies should not increase board size. Additionally, promoting women executives in the boardroom can bring cultural diversity benefits and reduce information asymmetry. Based on the findings, the research proposes several recommendations for companies and managers to improve performance and reduce the negative effects of poor governance mechanisms.
CITE THIS PAPER:
Ho, The Tran (2023). “Corporate Governance, Firm Characteristics and Firm Performance: Empirical Evidence from Vietnam.” Journal of World Economy: Transformations & Transitions (JOWETT) 3(06):25. DOI: https://doi.org/10.52459/jowett36250423
Adams, R. B., Hermalin, B. E., & Weisbach, M. S. (2010). The role of boards of directors in corporate governance: A conceptual framework and survey. Journal of economic literature, 48(1), 58-107. DOI: 10.1257/jel.48.1.58
Aggarwal, R., Erel, I., Stulz, R., & Williamson, R. (2009). Differences in governance practices between US and foreign firms: Measurement, causes, and consequences. The Review of Financial Studies, 22(8), 3131-3169. DOI: https://doi.org/10.1093/rfs/hhn107
Agrawal, A., & Chadha, S. (2005). Corporate governance and accounting scandals. The journal of law and Economics, 48(2), 371-406.
Al-ahdal, W. M., Alsamhi, M. H., Tabash, M. I., & Farhan, N. H. (2020). The impact of corporate governance on financial performance of Indian and GCC listed firms: An empirical investigation. Research in International Business and Finance, 51, 101083. DOI: https://doi.org/10.1016/j.ribaf.2019.101083
Al‐Hadi, A., Hasan, M. M., & Habib, A. (2016). Risk committee, firm life cycle, and market risk disclosures. Corporate Governance: An International Review, 24(2), 145-170. DOI: https://doi.org/10.1111/corg.12115
Almustafa, H., Nguyen, Q. K., Liu, J., & Dang, V. C. (2023). The impact of COVID-19 on firm risk and performance in MENA countries: Does national governance quality matter? PloS one, 18(2), e0281148. DOI: https://doi.org/10.1371/journal.pone.0281148
Andreou, P. C., Antoniou, C., Horton, J., & Louca, C. (2016). Corporate governance and firm‐specific stock price crashes. European Financial Management, 22(5), 916-956. DOI: https://doi.org/10.1111/eufm.12084
Ararat, M., & Yurtoglu, B. B. (2020). Female directors, board committees, and firm performance: Time-series evidence from Turkey. Emerging Markets Review, 100768. DOI: https://doi.org/10.1016/j.ememar.2020.100768
Balachandran, B., Duong, H. N., Luong, H., & Nguyen, L. (2020). Does takeover activity affect stock price crash risk? Evidence from international M&A laws. Journal of Corporate Finance, 64, 101697. DOI: https://doi.org/10.1016/j.jcorpfin.2020.101697
Ballester, L., González-Urteaga, A., & Martínez, B. (2020). The role of internal corporate governance mechanisms on default risk: A systematic review for different institutional settings. Research in International Business and Finance, 54, 101293. DOI: https://doi.org/10.1016/j.ribaf.2020.101293
Basel Committee on Banking Supervision. (2015). Corporate governance principles for banks.
Basiruddin, R., & Ahmed, H. (2019). Corporate governance and shariah noncompliant risk in Islamic banks: evidence from Southeast Asia. Corporate governance.
Battaglia, F., & Gallo, A. (2015). Risk governance and Asian bank performance: An empirical investigation over the financial crisis. Emerging Markets Review, 25, 53-68. DOI: https://doi.org/10.1016/j.ememar.2015.04.004
Chen, J., Cheng, C., Ku, C. Y., & Liao, W. (2019). Are Banks Improving Risk Governance After the Financial Crisis? Journal of Accounting, Auditing & Finance. DOI: https://doi.org/10.1177/0148558X19870099.
Dang, V. C., Le, T. L., Nguyen, Q. K., & Tran, D. Q. (2020). Linkage between exchange rate and stock prices: Evidence from Vietnam. The Journal of Asian Finance, Economics, and Business, 7(12), 95-107. DOI: https://doi.org/10.13106/jafeb.2020.vol7.no12.095
Dang, V. C., & Nguyen, Q. K. (2021a). Determinants of FDI attractiveness: Evidence from ASEAN-7 countries. Cogent Social Sciences, 7(1), 2004676. DOI: https://doi.org/10.1080/23311886.2021.2004676
Dang, V. C., & Nguyen, Q. K. (2021b). Internal corporate governance and stock price crash risk: evidence from Vietnam. Journal of Sustainable Finance & Investment, 1-18. DOI: https://doi.org/10.1080/20430795.2021.2006128
Dang, V. C., & Nguyen, Q. K. (2022). Audit committee characteristics and tax avoidance: Evidence from an emerging economy. Cogent Economics & Finance, 10(1), 2023263. DOI: https://doi.org/10.1080/23322039.2021.2023263
Dang, V. C., Nguyen, Q. K., & Tran, X. H. (2022). Corruption, institutional quality and shadow economy in Asian countries. Applied Economics Letters, 1-6. DOI: https://doi.org/10.1080/13504851.2022.2118959
Fama, E. F. (1980). Agency problems and the theory of the firm. Journal of political economy, 88(2), 288-307. DOI: https://doi.org/10.1086/260866
Green, C. P., & Homroy, S. (2018). Female directors, board committees and firm performance. European Economic Review, 102, 19-38. DOI: https://doi.org/10.1016/j.euroecorev.2017.12.003
Hermalin, B. E., & Weisbach, M. S. (1991). The effects of board composition and direct incentives on firm performance. Financial management, 20(4), 101-112. DOI: https://doi.org/10.2307/3665716
Iannotta, G., Nocera, G., & Sironi, A. (2007). Ownership structure, risk and performance in the European banking industry. Journal of Banking & Finance, 31(7), 2127-2149. DOI: https://doi.org/10.1016/j.jbankfin.2006.07.013
Nguyen, Q., & Dang, V. (2020). Audit committee structure and bank stability in Vietnam. ACRN Journal of Finance and Risk Perspectives, 8(1), 240-255. DOI: https://doi.org/10.35944/jofrp.2019.8.1.015
Nguyen, Q. K. (2020). Ownership structure and bank risk-taking in ASEAN countries: A quantile regression approach. Cogent Economics & Finance, 8(1), 1809789. DOI: https://doi.org/10.1080/23322039.2020.1809789
Nguyen, Q. K. (2021). Oversight of bank risk-taking by audit committees and Sharia committees: conventional vs Islamic banks. Heliyon, 7(8), e07798. DOI: https://doi.org/10.1016/j.heliyon.2021.e07798
Nguyen, Q. K. (2022a). Audit committee effectiveness, bank efficiency and risk-taking: Evidence in ASEAN countries. Cogent Business & Management, 9(1), 2080622. DOI: https://doi.org/10.1080/23311975.2022.2080622
Nguyen, Q. K. (2022b). Audit committee structure, institutional quality, and bank stability: evidence from ASEAN countries. Finance Research Letters, 46, 102369. DOI: https://doi.org/10.1016/j.frl.2021.102369
Nguyen, Q. K. (2022c). Determinants of bank risk governance structure: A cross-country analysis. Research in International Business and Finance, 60, 101575. DOI: https://doi.org/10.1016/j.ribaf.2021.101575
Nguyen, Q. K. (2022d). The impact of risk governance structure on bank risk management effectiveness: evidence from ASEAN countries. Heliyon, e11192. DOI: https://doi.org/10.1016/j.heliyon.2022.e11192
Nguyen, Q. K., Dang, V. C. (2022a). Does the country’s institutional quality enhance the role of risk governance in preventing bank risk? Applied Economics Letters, 1-4. DOI: https://doi.org/10.1080/13504851.2022.2026868
Nguyen, Q. K., Dang, V.C. (2022b). The Effect of FinTech Development on Financial Stability in an Emerging Market: The Role of Market Discipline. Research in Globalization, 100105. DOI: https://doi.org/10.1016/j.resglo.2022.100105
Phan, T. A., & Duong, L. H. (2021). The effects of corporate governance mechanisms on firm performance: empirical evidence from Vietnam. The Journal of Asian Finance, Economics and Business, 8(4), 369-379. DOI: https://doi.org/10.13106/jafeb.2021.vol8.no4.0369
Zhou, H., Owusu-Ansah, S., & Maggina, A. (2018). Board of directors, audit committee, and firm performance: Evidence from Greece. Journal of International Accounting, Auditing and Taxation, 31, 20-36. DOI: https://doi.org/10.1016/j.intaccaudtax.2018.03.002
Copyright (c) 2023 The Tran HO
This work is licensed under a Creative Commons Attribution 4.0 International License.