An empirical investigation of the corporate governance and financial performance of Vietnamese non-financial listed firms : A thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Philosophy at Lincoln University

Abstract

During recent decades, corporate governance (CG) topics have attracted attention around the world (Ahrens, Filatotchev, & Thomsen, 2011), including whether CG impacts firm financial performance, a question remains unanswered. Therefore, this study examines the influence of CG features, including board and ownership structures, on the financial performance of Vietnamese non-financial listed firms. The study employs fundamental features of CG such as board size, board gender diversity, board independence, board duality, insider ownership, and blockholder ownership to analyse their likely effects on the financial performance measured by Tobin’s Q. The study uses a panel data of 412 Vietnamese non-financial listed firms during 2010-2015, and employs multiple estimation methods, including the System-GMM estimator to control for the endogeneity issue, and the ordinary least square (OLS) and fixed effects (FE) estimators for comparison purposes. The study result shows that except for board size and board gender diversity, which have no effect on the firms’ performance, the other governance attributes do impact the financial performance of Vietnamese non-financial listed firms. Specifically, board independence and board duality negatively influence the firms’ performance. The relationship between insider ownership and the firms’ performance is an inverted U-shaped form. When insider ownership is less than 30%, insider ownership positively influences the firms’ performance. As the proportion of insiders’ shares is above 30%, thus insider ownership negatively affects the financial performance of Vietnamese non-financial listed firms. Meanwhile, ownership concentration and the firms’ financial performance form a cubic relationship. At a low level (less than 25%) and a high level (more than 61%) of ownership concentration, the firms’ financial performance is positively related to ownership concentration. However, at the middle level (from 25% to 61%) of ownership concentration, the financial performance is negatively related to ownership concentration. The study results support the argument that there is no “one size fits all” governance mechanism, and help to enrich the understandings of the corporate governance - firm financial performance relationship in developing countries such as Vietnam.