Ownership structure and corporate governance - Evidence from listed firms in VietNam

Abstract

Nowadays, there are many determinants affecting economy strongly. Amongst these, corporate governance is an interesting factor as it has succeeded in catching public attention by the importance for economic stability and society, especially after both Asia crisis in 1997 and financial crisis in 2007. In the pace of development, corporate governance has become a vital part in any company playing as critical factor for successful management. This can be considered as a means to strengthen and build up companies and whole economy from internal mechanisms. The way an enterprise governs itself has led to debates for a long time to figure out best way of improving performance. As Berle and Means (1932) suggested that the scatter of ownership might increase separation of ownership and control, which causes the conflict among them, so called agency problem. Therefore, the demand of corporate governance becomes higher in recent days. Especially in the current context of Vietnam, our country has dealt with consequences from financial recession. There are many collapses of firms and problems from early stage of privatization. To achieve steady development, the economy requires further regulation to encourage better corporate governance practices. On the other hand, this topic seems to be new concept and few related researches are conducted in Vietnam. Therefore, this study is made to evaluate the relationship between four types of ownership including state ownership, foreign ownership, institutional ownership and managerial ownership and corporate governance based on public data collected from 283 companies in Ho Chi Minh Stock Exchange Market. The data is analyzed through specific programs to test descriptive statistics, correlation coefficients and also multiple regression analysis. Corporate performance is collected and processed by Corporate Governance Index table. The results then show that state ownership and institutional ownership have negatively significant relationship on corporate governance, while the statistical analysis shows no relationship of foreign and managerial with corporate governance.