Agency Problems, Equity Ownership, and Corporate Diversification

https://www.econstor.eu/bitstream/10419/187965/1/1-s2.0-S2314721017300804-main.pdf

Ownership concentration and bank profitability

We examine the effect of ownership structure on firm performance, for firms listed on Vietnamese stock exchanges, using 2744 firm-year observations over the period from 2007 to 2012. We find a non-linear relationship between ownership structure and firm performance. State ownership has a convex relationship with firm performance. This paper finds that firm performance increases beyond 28.67 percent level of state ownership. Foreign ownership has a concave relationship with firm performance. We find that firm performance increases with an increase of foreign ownership up to a level of 43 percent and then decreases. Policy makers should encourage foreign ownership and widely dispersed state ownership in firms, which can help improve firm performance.

https://papers.ssrn.com/sol3/Delivery.cfm/AEPA_AEPA12056.pdf?abstractid=2753309&mirid=1&type=2

Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms

The theoretical and empirical relationships between corporate social responsibility (CSR) and corporate financial performance are not without controversy. Yet, CSR activities are increasingly undertaken by a large number of firms, not only in developed countries but also in emerging countries. This paper aims to investigate the moderating effect of different aspects of corporate governance, which are foreign and state ownership, board size and board independence, on the relationship between CSR and financial performance.,A sample of Vietnamese listed firms is analyzed. Robust regression analysis is performed using ordinary least squares as well as fixed-effects and two-stage least squares model.,Ordinary least squares regression results show that CSR activities affect the financial performance of firms positively. Furthermore, corporate governance features like foreign ownership, board size and board independence strengthen the positive relationship between CSR and financial performance, but there is no such impact of state ownership.,Previous studies mostly investigate the direct effect of CSR on financial performance. A few studies examine the moderating effect of corporate governance, which is ownership concentration and board gender diversity. As an emerging country, Vietnam has some specific characteristics on corporate governance. This paper contributes by investigating the moderating effect of few major aspects of corporate governance, which are foreign and state ownership, board size and board independence.

Does corporate governance shape the relationship between corporate social responsibility and financial performance

Corporate Diversification and Shareholder Value: A Survey of Recent Literature

This paper examines the relationships among foreign ownership, capital structure, and firm value in the case of listed firms in Vietnam. Using fixed effect model on data of all listed companies (exclude financial firms and banks) in Hochiminh Stock Exchange during the period of 2008-2011, the research finds an interesting evidence that foreign ownership has negative impact on firm value while previous literature indicates controversal results. The result implies that foreign ownership in Vietnam is not concentrated and therefore it cannot play an monitoring role in corporate governance mechanism. The outcome also shows that there is a negative link between foreign ownership and capital structure due to the fact that foreign investors suffer from information asymmetric and increase debt for controlling agency problem. With regard to relationship between capital structure and firm value, increase in debt leverage of listed firms decrease firm value. Hence, traditional theories of capital structure should be adjusted while applying them in emerging markets. Apart of fixed effect method, simultaneous equations model is employed for controlling simultaneity problem.

Foreign Ownership, Capital Structure and Firm Value: Empirical Evidence from Vietnamese Listed Firms

Using data from Ho Chi Minh Stock Exchange and Hanoi Stock Exchange during the period of 2007 and 2012, this study examines the effect of corporate ownership (state ownership and foreign ownership) on firm performance. The empirical findings from fixed effect models show that while state ownership has an inverted U-shaped relationship with firm performance, foreign ownership has a U-shaped relationship with firm performance. These results imply that when ownership is concentrated, while state ownership lower firm performance, foreign ownership enhance firm performance.

https://papers.ssrn.com/sol3/Delivery.cfm/SSRN_ID2346069_code968491.pdf?abstractid=2332622&mirid=1

Corporate Ownership and Firm Performance in Emerging Market: A Study of Vietnamese Listed Firms

(ProQuest: ... denotes formulae omitted.)IntroductionIn Vietnam, ownership structure is a major issue of most firms. In the past, most firms were state-owned enterprises that relied on the government for sources of finance. However, with the mid-1980's economic reform, a number of firms were privatized and there has been a dramatic growth in new firms with diverse ownership structures, including private, foreign and joint-stock companies. In addition, the establishment of Ho Chi Minh Stock Exchange in 2000 is also an important part of economic development in Vietnam. Particularly, market capitalization value increased significantly, from only US$154 mn in 2003 to US$20.385 bn in 2010. With the growth of the stock exchange, there was a change in the ownership structure of corporations in Vietnam.1 Foreign ownership gradually became an essential part of ownership structure in both non-listed and listed firms due to the boom in foreign investment inflow. However, there is no research using a detailed dataset to examine the link among foreign ownership, capital structure and firm performance in Vietnam.Research till date has focused on diversified aspects of ownership structure. In recent literature, ownership structure appears as an important factor that affects the firm performance and capital structure as well. However, theoretical arguments still cannot indicate explicitly these relations and empirical evidence shows mixed results (Morck et al., 1988; and Margaritis and Psillaki, 2010). Studies on the relationship between ownership structure and firm performance often consider the managerial ownership, large shareholders' ownership, and the concentration (or dispersion) of ownership structure. However, there is not much empirical evidence about the influence of foreign ownership on capital structure and firm performance. Meanwhile, foreign ownership has become common and plays an important role in emerging economies due to the sharp increase in foreign investment. With regard to relationship between ownership structure and capital structure, there are few studies that examine the relationship between ownership structure and capital structure (Margaritis and Psillaki, 2010; and Ruan et ai, 2011). In detail, studies that link ownership structure to capital structure only attempt to identify the determinants of capital structure. It is necessary to deeply investigate the connections between ownership structure and capital structure, especially in emerging economies.Besides, after the economic reforms in 1986, Vietnam became an emerging market and occupies a considerable position in emerging countries as well as in the world economy. Indeed, Vietnam is one of the nations that has a high economic growth rate among the developing Asian countries (IMF, 2010).2 Moreover, compared to other transitional markets such as the Eastern European countries, Vietnam's economy has performed successfully (Donor, 2011). According to the Emerging Markets Opportunity Index 2010 of Grant Thornton (2010), Vietnam occupies the 16th position. Therefore, a study examining these relationships in Vietnam is essential. Against this backdrop, the purpose of this study is to investigate: (1) the effect of foreign ownership on capital structure; and (2) the impact of foreign ownership on firm performance.The rest of the paper is organized as follows: it reviews the related literature and develops the hypotheses, followed by a description of the methodology used and specification of the empirical models. Subsequently, it discusses the results, and finally, offers the conclusion.Literature Review and Hypotheses DevelopmentAgency theory introduced by Jensen and Meckling (1976) and Jensen (1986) is mostly used to interpret the relationships between ownership structure, capital structure andfirm performance. Agency theory suggests that a separation of management and ownership creates agency cost since managers may not align their own interest with those of the shareholders. …

Foreign ownership, capital structure and firm performance : empirical evidence from Vietnamese listed firms

We examine the effect of corporate diversification on the performance of firms listed on the Vietnamese stock exchanges, using 2744 firm year observations over the period from 2007 to 2012. We find that corporate diversification has a negative impact on firm performance. Our results are robust to various econometric estimation techniques including fixed effect, instrumental fixed effect, Heckman selection model and system generalised method of moments. In the Vietnamese context, the lack of an efficient corporate governance system may encourage firms to follow corporate diversification strategies, thus impairing their performance.

Duc Nam Phung

Papers

Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms

Foreign Ownership, Capital Structure and Firm Value: Empirical Evidence from Vietnamese Listed Firms

Corporate Ownership and Firm Performance in Emerging Market: A Study of Vietnamese Listed Firms

Foreign ownership, capital structure and firm performance : empirical evidence from Vietnamese listed firms

Corporation diversification and firm performance : evidence from Vietnamese listed firms