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Local business environment, domestic CEOs and firm performance in a transitional economy: Empirical evidence from Vietnam

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  • Vo, Xuan Vinh
  • Nguyen, Thi Lam Anh
  • Tuan, Le Quoc
  • Luu, Hiep Ngoc
  • Vu, Kieu Trang

Abstract

This paper investigates the impact of CEO origin on firm performance in the context of a transitional country. Our analysis, which uses data from over 298,000 firms operating in Vietnam, shows that firms operating in a more favourable business environment are less likely to employ a domestic expert as their CEO. However, firms managed by a domestic CEO appear to outperform those run by a foreign peer, especially when they operate in an environment characterised by having low entry costs, low time costs, high transparency, high proactivity, adequate business support, and sufficient labour training. This result is more pronounced for larger firms. These findings are robust to various model specifications. The paper provides informative implications to market participants, policy makers, and academics.

Suggested Citation

  • Vo, Xuan Vinh & Nguyen, Thi Lam Anh & Tuan, Le Quoc & Luu, Hiep Ngoc & Vu, Kieu Trang, 2020. "Local business environment, domestic CEOs and firm performance in a transitional economy: Empirical evidence from Vietnam," Economic Analysis and Policy, Elsevier, vol. 66(C), pages 236-249.
    • Handle: RePEc:eee:ecanpo:v:66:y:2020:i:c:p:236-249
    DOI: 10.1016/j.eap.2020.04.006
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    References listed on IDEAS

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    Cited by:

    1. Dzung Viet Nguyen & Ngan Hoang-Kim Nguyen & Tien Thuy Dinh, 2023. "CEO attributes and firm performance: Evidence from companies listed on Ho Chi Minh Stock Exchange," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(2), pages 2282838-228, October.
    2. Geofry Areneke & Abongeh A. Tunyi, 2022. "Chairperson and CEO foreignness and CG quality of emerging markets MNCs: Moderating role of international board interlocks," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(3), pages 3071-3092, July.
    3. Choi, Paul Moon Sub & Chung, Chune Young & Vo, Xuan Vinh & Wang, Kainan, 2020. "Are better-governed firms more innovative? Evidence from Korea," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 263-279.

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    More about this item

    Keywords

    Local business environment; Domestic CEO; Firm performance; PCI; Vietnam;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General

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