IDEAS home Printed from https://ideas.repec.org/a/bla/ausecp/v55y2016i1p63-98.html
   My bibliography  Save this article

Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms

Author

Listed:
  • Duc Nam Phung
  • Anil V. Mishra

Abstract

type="main"> 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.

Suggested Citation

  • Duc Nam Phung & Anil V. Mishra, 2016. "Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 63-98, March.
  • Handle: RePEc:bla:ausecp:v:55:y:2016:i:1:p:63-98
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/1467-8454.12056
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. repec:hrv:faseco:33077889 is not listed on IDEAS
    2. Michael L. Lemmon & Karl V. Lins, 2003. "Ownership Structure, Corporate Governance, and Firm Value: Evidence from the East Asian Financial Crisis," Journal of Finance, American Finance Association, vol. 58(4), pages 1445-1468, August.
    3. Jaewoon Koo & Kyunghee Maeng, 2006. "Foreign ownership and investment: evidence from Korea," Applied Economics, Taylor & Francis Journals, vol. 38(20), pages 2405-2414.
    4. repec:hrv:faseco:30728046 is not listed on IDEAS
    5. Lin, Chihuang H. & Shiu, Cheng-Yi, 2003. "Foreign ownership in the Taiwan stock market--an empirical analysis," Journal of Multinational Financial Management, Elsevier, vol. 13(1), pages 19-41, February.
    6. Firth, Michael & Lin, Chen & Wong, Sonia M.L., 2008. "Leverage and investment under a state-owned bank lending environment: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 642-653, December.
    7. Smith, Stephen C. & Cin, Beom-Cheol & Vodopivec, Milan, 1997. "Privatization Incidence, Ownership Forms, and Firm Performance: Evidence from Slovenia," Journal of Comparative Economics, Elsevier, vol. 25(2), pages 158-179, October.
    8. Belén Villalonga, 2004. "Diversification Discount or Premium? New Evidence from the Business Information Tracking Series," Journal of Finance, American Finance Association, vol. 59(2), pages 479-506, April.
    9. Megginson, William L & Nash, Robert C & van Randenborgh, Matthias, 1994. " The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis," Journal of Finance, American Finance Association, vol. 49(2), pages 403-452, June.
    10. Yuan Ding & Hua Zhang & Junxi Zhang, 2007. "Private vs State Ownership and Earnings Management: evidence from Chinese listed companies," Corporate Governance: An International Review, Wiley Blackwell, vol. 15(2), pages 223-238, March.
    11. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
    12. Michael J. Cooper & Huseyin Gulen & Alexei V. Ovtchinnikov, 2010. "Corporate Political Contributions and Stock Returns," Journal of Finance, American Finance Association, vol. 65(2), pages 687-724, April.
    13. Wei, Zuobao & Varela, Oscar, 2003. "State equity ownership and firm market performance: evidence from China's newly privatized firms," Global Finance Journal, Elsevier, vol. 14(1), pages 65-82, May.
    14. Kolasa, Marcin & Rubaszek, Michal & Taglioni, Daria, 2010. "Firms in the great global recession: The role of foreign ownership and financial dependence," Emerging Markets Review, Elsevier, vol. 11(4), pages 341-357, December.
    15. Bae, Kee-Hong & Baek, Jae-Seung & Kang, Jun-Koo & Liu, Wei-Lin, 2012. "Do controlling shareholders' expropriation incentives imply a link between corporate governance and firm value? Theory and evidence," Journal of Financial Economics, Elsevier, vol. 105(2), pages 412-435.
    16. Stephen Bond, 2002. "Dynamic panel data models: a guide to microdata methods and practice," CeMMAP working papers CWP09/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    17. Roodman, David, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 1-51.
    18. Stijn Claessens & Simeon Djankov & Joseph P. H. Fan & Larry H. P. Lang, 2002. "Disentangling the Incentive and Entrenchment Effects of Large Shareholdings," Journal of Finance, American Finance Association, vol. 57(6), pages 2741-2771, December.
    19. Boycko, Maxim & Shleifer, Andrei & Vishny, Robert W, 1996. "A Theory of Privatisation," Economic Journal, Royal Economic Society, vol. 106(435), pages 309-319, March.
    20. Roger D. Huang & Cheng-Yi Shiu, 2009. "Local Effects of Foreign Ownership in an Emerging Financial Market: Evidence from Qualified Foreign Institutional Investors in Taiwan," Financial Management, Financial Management Association International, vol. 38(3), pages 567-602, September.
    21. Shleifer, Andrei & Vishny, Robert W, 1997. " A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    22. Demsetz, Harold & Villalonga, Belen, 2001. "Ownership structure and corporate performance," Journal of Corporate Finance, Elsevier, vol. 7(3), pages 209-233, September.
    23. Dey, Tania & Banerjee, Rajabrata, 2011. "Can Corporate Diversification Promote Firm Value? A Survey," MPRA Paper 28928, University Library of Munich, Germany.
    24. Liljeblom, Eva & Loflund, Anders, 2005. "Determinants of international portfolio investment flows to a small market: Empirical evidence," Journal of Multinational Financial Management, Elsevier, vol. 15(3), pages 211-233, July.
    25. Mike Burkart & Denis Gromb & Fausto Panunzi, 1997. "Large Shareholders, Monitoring, and the Value of the Firm," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 693-728.
    26. Iuliana Oana MIHAI, 2012. "Foreign Owned Companies and Financial Performance. A Case Study on Companies Listed on Bucharest Stock Exchange," Economics and Applied Informatics, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, issue 1, pages 13-20.
    27. Oxelheim, Lars & Randoy, Trond, 2003. "The impact of foreign board membership on firm value," Journal of Banking & Finance, Elsevier, vol. 27(12), pages 2369-2392, December.
    28. Chen, Chiung-Jung & Yu, Chwo-Ming Joseph, 2012. "Managerial ownership, diversification, and firm performance: Evidence from an emerging market," International Business Review, Elsevier, vol. 21(3), pages 518-534.
    29. Farooqi, Javeria & Harris, Oneil & Ngo, Thanh, 2014. "Corporate diversification, real activities manipulation, and firm value," Journal of Multinational Financial Management, Elsevier, vol. 27(C), pages 130-151.
    30. Byungmo Kim, 2011. "Do Foreign Investors Encourage Value-Enhancing Corporate Risk Taking?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(3), pages 88-110, May.
    31. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, Oxford University Press, vol. 109(4), pages 995-1025.
    32. Tarun Khanna & Krishna Palepu, 1999. "Emerging Market Business Groups, Foreign Investors, and Corporate Governance," NBER Working Papers 6955, National Bureau of Economic Research, Inc.
    33. Aigbe Akhigbe & Jeff Madura, 1996. "Dividend Policy and Corporate Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 23(9-10), pages 1267-1287, December.
    34. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    35. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
    36. Trien Le & Trevor Buck, 2011. "State ownership and listed firm performance: a universally negative governance relationship?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 15(2), pages 227-248, May.
    37. Antonio Capobianco & Hans Christiansen, 2011. "Competitive Neutrality and State-Owned Enterprises: Challenges and Policy Options," OECD Corporate Governance Working Papers 1, OECD Publishing.
    38. Kurt Hess & Abeyratna Gunasekarage & Martin Hovey, 2010. "State-dominant and non-state-dominant ownership concentration and firm performance: Evidence from China," International Journal of Managerial Finance, Emerald Group Publishing, vol. 6(4), pages 264-289, September.
    39. Villalonga, Belen & Amit, Raphael, 2006. "How do family ownership, control and management affect firm value?," Journal of Financial Economics, Elsevier, vol. 80(2), pages 385-417, May.
    40. Zhong-qin Su & Hung-Gay Fung, 2013. "Political Connections and Firm Performance in Chinese Companies," Pacific Economic Review, Wiley Blackwell, vol. 18(3), pages 283-317, August.
    41. Stulz, ReneM., 1988. "Managerial control of voting rights : Financing policies and the market for corporate control," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 25-54, January.
    42. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    43. Nguyen, Pascal, 2012. "The impact of foreign investors on the risk-taking of Japanese firms," Journal of the Japanese and International Economies, Elsevier, vol. 26(2), pages 233-248.
    44. Lien, Yung-Chih & Li, Shaomin, 2013. "Does diversification add firm value in emerging economies? Effect of corporate governance," Journal of Business Research, Elsevier, vol. 66(12), pages 2425-2430.
    45. Qian Sun & Wilson H. S. Tong & Jing Tong, 2002. "How Does Government Ownership Affect Firm Performance? Evidence from China's Privatization Experience," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 29(1&2), pages 1-27.
    46. Tobin, James, 1969. "A General Equilibrium Approach to Monetary Theory," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 1(1), pages 15-29, February.
    47. Boubakri, Narjess & Cosset, Jean-Claude & Saffar, Walid, 2013. "The role of state and foreign owners in corporate risk-taking: Evidence from privatization," Journal of Financial Economics, Elsevier, vol. 108(3), pages 641-658.
    48. repec:spr:portec:v:1:y:2002:i:2:d:10.1007_s10258-002-0009-9 is not listed on IDEAS
    49. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    50. Davies, J.R. & Hillier, David & McColgan, Patrick, 2005. "Ownership structure, managerial behavior and corporate value," Journal of Corporate Finance, Elsevier, vol. 11(4), pages 645-660, September.
    51. Andrei Shleifer, 1998. "State versus Private Ownership," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 133-150, Fall.
    52. Weiwen Li & Ai He & Hailin Lan & Daphne Yiu, 2012. "Political connections and corporate diversification in emerging economies: Evidence from China," Asia Pacific Journal of Management, Springer, vol. 29(3), pages 799-818, September.
    53. Chen, Sheng-Syan & Ho, Kim Wai, 2000. "Corporate diversification, ownership structure, and firm value: The Singapore evidence," International Review of Financial Analysis, Elsevier, vol. 9(3), pages 315-326.
    54. Tian, Lihui & Estrin, Saul, 2008. "Retained state shareholding in Chinese PLCs: Does government ownership always reduce corporate value?," Journal of Comparative Economics, Elsevier, vol. 36(1), pages 74-89, March.
    55. Ang, James S. & Ding, David K., 2006. "Government ownership and the performance of government-linked companies: The case of Singapore," Journal of Multinational Financial Management, Elsevier, vol. 16(1), pages 64-88, February.
    56. Fukui, Yoshitaka & Ushijima, Tatsuo, 2007. "Corporate diversification, performance, and restructuring in the largest Japanese manufacturers," Journal of the Japanese and International Economies, Elsevier, vol. 21(3), pages 303-323, September.
    57. de Miguel, Alberto & Pindado, Julio, 2001. "Determinants of capital structure: new evidence from Spanish panel data," Journal of Corporate Finance, Elsevier, vol. 7(1), pages 77-99, March.
    58. Gibson, Michael S., 2003. "Is Corporate Governance Ineffective in Emerging Markets?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 38(01), pages 231-250, March.
    59. Coles, Jeffrey L. & Lemmon, Michael L. & Felix Meschke, J., 2012. "Structural models and endogeneity in corporate finance: The link between managerial ownership and corporate performance," Journal of Financial Economics, Elsevier, vol. 103(1), pages 149-168.
    60. Wei, Zuobao & Xie, Feixue & Zhang, Shaorong, 2005. "Ownership Structure and Firm Value in China's Privatized Firms: 1991–2001," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 40(01), pages 87-108, March.
    61. Andres, Christian, 2008. "Large shareholders and firm performance--An empirical examination of founding-family ownership," Journal of Corporate Finance, Elsevier, vol. 14(4), pages 431-445, September.
    62. William C. Brainard & James Tobin, 1968. "Pitfalls in Financial Model-Building," Cowles Foundation Discussion Papers 244, Cowles Foundation for Research in Economics, Yale University.
    63. Lin, Chen & Su, Dongwei, 2008. "Industrial diversification, partial privatization and firm valuation: Evidence from publicly listed firms in China," Journal of Corporate Finance, Elsevier, vol. 14(4), pages 405-417, September.
    64. Artur Morgado & Julio Pindado, 2003. "The Underinvestment and Overinvestment Hypotheses: an Analysis Using Panel Data," European Financial Management, European Financial Management Association, vol. 9(2), pages 163-177.
    65. Fukunari Kimura & Kozo Kiyota, 2007. "Foreign-owned versus Domestically-owned Firms: Economic Performance in Japan," Review of Development Economics, Wiley Blackwell, vol. 11(1), pages 31-48, February.
    66. Margaritis, Dimitris & Psillaki, Maria, 2010. "Capital structure, equity ownership and firm performance," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 621-632, March.
    67. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    68. Borisova, Ginka & Brockman, Paul & Salas, Jesus M. & Zagorchev, Andrey, 2012. "Government ownership and corporate governance: Evidence from the EU," Journal of Banking & Finance, Elsevier, vol. 36(11), pages 2917-2934.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. repec:arp:ijefrr:2018:p:188-196 is not listed on IDEAS
    2. repec:bla:ausecp:v:55:y:2016:i:4:p:368-385 is not listed on IDEAS
    3. repec:arp:tjssrr:2018:p:396-401 is not listed on IDEAS

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:ausecp:v:55:y:2016:i:1:p:63-98. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley Content Delivery). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0004-900X .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.