Foreign ownership and financial performance : Evidence from Vietnamese listed companies in Ho Chi Minh stock exchange (HOSE)
Abstract
Using data from Ho Chi Minh Stock Exchange (HOSE) during the period of
2008 and 2012, this study examines the effect of foreign ownership on firm performance.
The quantitative method was applied and data collection from HOSE was conducted.
This data was done using descriptive statistics and regression analysis. As a result,
through descriptive statistics and comparison of the differences between different
industries, this study finds out the different level of foreign ownership and also their
performance in these sectors, respectively. Moreover, after running regression analysis
and testing research model, the study indicates Foreign Ownership of Vietnam listed
Company on Ho Chi Min Stock Exchange has a positive relationship with Firm
Performance, and it can be included that he monitoring role of foreign ownership work
effectively in HOSE listed firms in improving their financial performance. Furthermore,
this study also points out the U-shaped relationship between Foreign Ownership and
Financial Performance measured by ROA; it is consistent with the previous research of
Phung and Hoang, 2013. It explained that ownership structure may have reverse impact
when it is highly concentrated. In case of Vietnam Listed Companies on HOSE, despite
of not really clear expression, they also shows that foreign ownership may associates with
low performance at initial, it would enhance firm performance at a certain level. Foreign
shareholders can do their monitoring role in listed firms when they have enough
proportion possession in ownership structure of firms. In addition, at a high level of
ownership they have ability to transfer their advanced technology or skills to firms.
In conclusion, there are a number of obstacles within doing research HOSE
companies caused by lack of time, deeper knowledge and further experiences in this
field. Some conclusions were still made in order to help the managers as well as investors
to have the clearer picture of overall affection of foreign ownership on firm performance
so that they can have effective strategy and appropriate plan in attracting foreign
investors, also taking their advantage to empower company.