Insiders, Outsiders and Performance of Vietnamese Firms

Richard  Beason; Tu Thi Thanh  Tran; Dong Phuong  Dao; Hong Minh  Nguyen

Richard Beason Alberta School of Business, University of Alberta
Tu Thi Thanh Tran Vietnam Japan University, Vietnam National University Hanoi
Dong Phuong Dao Coventry University
Hong Minh Nguyen Vietnam National University

Keywords: Bank, ownership structure, insider investor, outsider investor

Abstract

The consensus in the finance literature is that a large proportion of inside ownership (defined as greater than 5% share ownership by non-institutional holders, managerial holdings, founding family holdings, cross-shareholdings by affiliated firms and ownership by creditors) tends to be associated with more unsatisfactory performance (as measured by ROE or ROA) when compared to firms with lower inside ownership, all else equal. However, this need not be the case if insiders act as monitors of the firm and have the same interest in returns as outsiders. Ownership structure and firm level financial performance have not been widely studied in Vietnam. Using data from 729 listed firms in Vietnam for 2018, we test the hypothesis that greater insider ownership has a negative impact on firm performance. We found that Vietnam's insiders play a monitoring role, exercising their relative power to ensure the firm's profitable functioning. These findings are inconsistent with research on Japanese groupings, as well as other findings. The Vietnamese stock market does not appear to be negatively affected by insider influence; indeed, insiders appear to act as positive monitors.

Author Biographies

Richard Beason, Alberta School of Business, University of Alberta

Richard Beason graduated with honors in economics from the University of California, Berkeley in 1980. He completed his PhD in economics at the University of Michigan and joined the University of Alberta in 1990. Beason is currently Professor of Business Economics and International Business in the School of Business, University of Alberta. Beason’s primary research areas include labor supply, macroeconomics, financial economics and policy evaluation. During the academic year 2018-2019 he was Visiting Scholar at Vietnam National University, University of Economics and Business in Hanoi.

Tu Thi Thanh Tran, Vietnam Japan University, Vietnam National University Hanoi

Assoc. Prof. Dr. Tran Thi Thanh Tu is the Vice-Rector, Vietnam Japan University, Vietnam National University Hanoi. She got the Bachelor of Banking and Finance, National Economics University, Vietnam (1998), Master of International Accounting, Swinburne University of Technology, Australia (2006), and Doctor of Finance, National Economics University, Vietnam (2007). She was a visiting scholar at the University of Massachusetts Lowell, USA from 2018 – 2019 (US-ASEAN Fulbright Program). She is the former Dean, Faculty of Finance and Banking, University of Economics and Business, Vietnam National University Hanoi. Her research interests are corporate governance, corporate finance, green finance. She also takes part in many projects from World Bank, IFC,…

Dong Phuong Dao, Coventry University

Dao Phuong Dong, Ph.D. Finance Researcher at Centre for Financial and Corporate Integrity, Coventry University, UK. He is a former Lecturer of the Finance and Banking Faculty, University of Economics and Business, Vietnam National University. He graduated MBA Finance from Bangor University, the UK with a Distinction grade in 2017 and a Bachelor in Finance and Banking from the University of Economics and Business, Vietnam National University in 2016. His research interests are Quantitative Finance, Crowdfunding, Blockchain, and Algorithm Trading. He has collaborated as the corresponding author in some papers publishing in International journals such as Investment Management and Financial Innovations (Scopus), Academy of Accounting and Financial Studies Journal (Scopus), or international conferences such as the Annual Asia Pacific Management Accounting Association Conference, CIFBA Conference, World Bank Group Conference.

Hong Minh Nguyen, Vietnam National University

Minh Nguyen, PhD Finance at School of Business & Management, RMIT University. She is a lecturer in Finance at the Faculty of Finance and Banking, University of Economics and Business, Vietnam National University. She graduated MSc Finance from University of Liverpool, UK with Distinction (top 5) in 2019 and Bachelor in Finance and Banking from National Economics University, Vietnam in 2018. Her research interests are Corporate Finance, Fintech, Decentralized Finance.

References

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