The impact of corporate governance index on firm financial performance of listed companies on Ho Chi Minh stock exchange (HOSE)
Abstract
The purpose of this research is examination the relationship between corporate
governance and firm financial performance. The governance practices are evaluated by
Corporate Governance Index (CGI) issued by International Finance Corporation. On the
other hand, three typical financial indicators: Return-on-equity (ROE), Return-on-assets
(ROA) and Tobin’s q ratio are represented as firm performance. After using the Descriptive
Statistics, Pearson’s correlation as well as the Multiple Linear Regressions, the results have
investigated that Corporate Governance Index has a positive impact on firm performance.
All listed firms on Hochiminh Stock Exchange (HOSE) are chosen to be research
objectives since HOSE has been an active stock market including most of the attractive
and well-known firms in Vietnam. The collection process is conducted within one year-
2013 due to time and cost consuming.
As results, there are significantly positive improvements in corporate governance
structure of Vietnam firms regard to the higher CGI compare with IFC’s CGI conducting
in year 2011. In the end of this research, the conclusions and recommendations are
provided in order to help Vietnam company to have the clearer picture of corporate
governance structures as well as enhance its practices and thereby perform a better outcome
in the near future.