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Characteristics of the Board of Directors and Corporate Financial Performance—Empirical Evidence

Author

Listed:
  • Van Chien Nguyen

    (Institute of Graduate Studies, Thu Dau Mot University, Thu Dau Mot City 75000, Vietnam)

  • Thi Ngoc Thuan Huynh

    (Institute of Graduate Studies, Thu Dau Mot University, Thu Dau Mot City 75000, Vietnam)

Abstract

The objectives of the research are to investigate the characteristics of the Board of Directors on the financial performance of the enterprise using sample data from 52 construction and real estate enterprises listed on the Vietnam stock exchange in the period 2006–2020. Using typical regression methods such as pooled OLS, FEM, REM, and assessing the defects of the research model, the FGLS method is selected. At the same time, due to the existence of endogenous phenomena and the nature of interdependence among enterprises in Vietnam, research using the instrumental variables two-step generalized method of moments (IV-GMM) is conducted in order to correct for cross-sectional dependence, autocorrelation, endogeneity, and heteroskedasticity in the analysis. Research results suggest that board size, female board members, meeting frequency, and board members’ education have a positive influence on financial performance. Moreover, as the independence of the Board of Directors increases, the business efficiency decreases. The research also found a positive relationship of tangible fixed assets, and a negative relationship between capital structure choice, firm size, and corporate financial performance. Finally, we propose some implications for enhancing the financial performance of Vietnamese firms.

Suggested Citation

  • Van Chien Nguyen & Thi Ngoc Thuan Huynh, 2023. "Characteristics of the Board of Directors and Corporate Financial Performance—Empirical Evidence," Economies, MDPI, vol. 11(2), pages 1-15, February.
    • Handle: RePEc:gam:jecomi:v:11:y:2023:i:2:p:53-:d:1059630
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    References listed on IDEAS

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    1. Myers, Stewart C. & Majluf, Nicholas S., 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Journal of Financial Economics, Elsevier, vol. 13(2), pages 187-221, June.
    2. Green, Colin P. & Homroy, Swarnodeep, 2018. "Female directors, board committees and firm performance," European Economic Review, Elsevier, vol. 102(C), pages 19-38.
    3. Van Chien Nguyen & Thu Thuy Nguyen, 2022. "Dependence and contagion between Vietnamese and major East Asian stock markets," International Journal of Management Practice, Inderscience Enterprises Ltd, vol. 15(4), pages 445-459.
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    Cited by:

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    2. Zahra El Shlmani & Haslindar Ibrahim & Muhammad Tahir & Suhaib Al‐khazaleh, 2025. "Corporate moral hazard and ESG performance: Unveiling the influence of gross enforcement actions and ownership dynamics in US multinational corporations," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 32(2), pages 1473-1494, March.
    3. Chien-Van Nguyen, 2024. "Air Transport Resilience, Tourism and Its Impact on Economic Growth," Economies, MDPI, vol. 12(9), pages 1-18, September.
    4. Amneh Hardan & Ghassan Daas & Abdulnaser Nour & Abdullateef Abudiak, 2026. "Board characteristics, ownership structure, and financial sustainability: evidence from Palestine and Jordan," Future Business Journal, Springer, vol. 12(1), pages 1-26, December.
    5. Peter Kwarteng & Kingsley Opoku Appiah & Bismark Addai, 2023. "Influence of board mechanisms on sustainability performance for listed firms in Sub-Saharan Africa," Future Business Journal, Springer, vol. 9(1), pages 1-24, December.

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