Relationship between institutional ownership and firm performance the case of Vietnam
Abstract
Based on the sample of Vietnamese non-financial listed companies in year
2010, this paper aims at clarifying the relationship between institutional ownership and firm performance (return-on assets). By reviewing of literature and related theories, three hypotheses are proposed and tested through multiple linear regression models. Results show that there is a positive relationship between institutional ownership and firm performance. In term of nationality, the foreign institutional ownership has better positive relationship with firm performance than domestic institutional ownership. Furthermore, this paper confirms that institutional investors’ representatives in firm’s board of director have moderating effect on the association between institutional ownership and firm performance. The presences of institutional investors’ representatives strengthen the positive relationship between institutional ownership and firm performance. The study helps to understand relationship between institutional ownership and the role of institutional investors’ representative in board of firms to this relationship. Given the institutional ownership, this study sheds light for firm management on the effects of institutional ownership on firm performance. In addition, the study may assist would-be investors who may contemplate investing in firms that have institutional ownership. The findings of this research also support for further studies in investigating relation of
institutional ownership and firm performance with other aspects.