Corporate governance structures and financial performance: a comparative study of publicly listed companies in Singapore and Vietnam
This study uses a dynamic modelling approach to investigate the relationship between corporate governance structures and financial performance of publicly listed companies in Singapore and Vietnam. The dynamic modelling approach facilitates answering the first research question: whether the re...
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| Định dạng: | Dissertation |
| Ngôn ngữ: | English |
| Được phát hành: |
University of Waikato
2022
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| Những chủ đề: | |
| Truy cập trực tuyến: | http://scholar.dlu.edu.vn/thuvienso/handle/DLU123456789/113266 |
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| Thư viện lưu trữ: | Thư viện Trường Đại học Đà Lạt |
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| Tóm tắt: | This study uses a dynamic modelling approach to investigate the relationship
between corporate governance structures and financial performance of publicly
listed companies in Singapore and Vietnam. The dynamic modelling approach
facilitates answering the first research question: whether the relationship between
corporate governance structures and firm financial performance persists in the
Singaporean and Vietnamese markets when the relationship’s dynamic nature is
taken into account. Moreover, by focusing on two different types of national
governance systems in the Asian region (well-developed vs. under-developed),
this study observes how the relationship between corporate governance structures
and firm performance is moderated by each country’s national governance quality.
By carrying out this observation, this study answers the second research question:
whether the corporate governance–firm performance relationship varies according
to the quality of national governance systems in which firms operate.
Two samples – including a total of 379 publicly listed non-financial companies1
covering a four-year period from 2008 to 2011– are examined through the use of a
two-step system generalised method of moments estimator. This estimation
technique allows for potential sources of endogeneity inherent in the corporate
governance–firm performance relationship, including dynamic endogeneity,
simultaneity, and unobserved time-invariant heterogeneity across firms.
The results suggest that the performance effect of corporate governance structures
persists in both markets even after the dynamic nature of the corporate
1 There are 122 companies for the Vietnamese market and 257 companies for the
Singaporean market.
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governance–firm performance relationship is taken into consideration. For the
Singaporean market, the results also show that the three corporate governance
structures (board diversity, board size and ownership structures) appear to have
statistically significant effects on firm performance. For both markets, it is
observed that there is a statistically significantly positive relationship between
ownership concentration and financial performance. This finding supports the
prediction of agency theory regarding the efficient monitoring effect of large
shareholders in markets with highly concentrated ownership.
For the Vietnamese market, the results show that board gender diversity has a
positive effect on firm performance. Remaining robust even after the alternative
proxies for gender diversity are employed, this finding is consistent with the
perspectives of agency theory and resource dependence theory. The number of
female directors in the boardroom also matters, supporting the view that if female
board representation affects firm outcomes, this effect is more pronounced when
the number of female directors increases. However, the marginal positive
performance effect of board gender diversity ceases when the percentage of
female directors reaches a breakpoint of about 20%. This finding suggests that
there is perhaps a potential trade-off between the costs and benefits of board
gender diversity.
Importantly, the results indicate that the relationship between the current
performance and one-year lagged performance is statistically significantly
positive in both markets, and robust when alternative estimation methods and
models are employed. In line with Wintoki, Linck, and Netter (2012), among
others, this finding suggests that the corporate governance–firm performance
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relationship should be investigated in a dynamic framework. This means that past
firm performance should be considered as an important independent variable to
control for potential effects of unobserved historical factors on current corporate
governance structures and performance.
Furthermore, the results show that better national governance quality has a
positive effect on firm performance, and that the performance effect of ownership
concentration is contingent upon national governance quality. The results suggest
that ownership concentration appears to have a stronger positive effect on
performance of companies in Vietnam where the national governance system is
underdeveloped. In contrast, concentrated ownership tends to have a weaker effect
on financial performance of firms in Singapore where the national governance
system is well-established. This finding is consistent with the argument that
ownership concentration is an efficient corporate governance mechanism which
can substitute for weak national governance quality. In the absence of effective
national governance mechanisms, ownership concentration is likely to be an
important corporate governance strategy for Vietnamese firms to control potential
agency problems. On the contrary, in Singapore, where national governance
quality – such as legal protection of shareholders – is much better, the role of
ownership concentration in determining performance seems to be weaker.
This study is novel in that it is the first to explore the corporate governance–firm
performance relationship using a dynamic modelling approach for the Vietnamese
and Singaporean markets. The findings of this study significantly contribute
toward a better understanding of international diversity on corporate governance
by providing robust empirical evidence from the emerging and mature markets in
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the Asian region. This study also extends the corporate governance literature by
enriching the understanding of the interaction between corporate-level and
national-level governance mechanisms |
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