This book investigates the institutional characteristics of state-linked firms in Vietnam to draw lessons for investors/MNCs targeting Vietnam and other emerging markets in the region. Vietnam and many other ASEAN countries have gone through a period of privatization and equitization of wholly controlled SOEs, with the State retaining partial ownership in many privatized businesses. This book explains the dynamic relationships between the State, BODs, shareholders, and regulators and their influence on corporate governance and SOE performance. This book differs from other publications in that it extrapolates the findings from our study to a broader context on how the defined internal mechanisms implicate the local economy and global supply chains/markets.
This book investigates robust theoretical foundations, and rigorous applied empirical research underpin the role of the State in SOEs. It differs from other studies in terms of qualitative and empirical research to provide the contextual setting to elucidate how to successfully navigate emerging market business with the State as an "owner-participant." This book explains the theoretical constructs of corporate governance in SOEs, applies empirical research methodologies, and draws results to validate inferences to (1) investigate the link between the board of directors and ownership attributes and agency cost levels using Vietnamese listed firms for the period from 2006 to 2013, (2) evaluate the effectiveness of State's corporate initiatives and monitoring through its sovereign wealth fund known as the State Capital Investment Corporation (SCIC), and (3) infer and explain the motivation of the State as a shareholder.
This book takes cognizance of Vietnam's idiosyncratic institutional (using its sovereign wealth fund as an investment vehicle and management proxy), economic, regulatory, and corporate environments and the realities for developing an effective and sustainable business model, vis-à-vis the ownership structure, board of directors' composition and corporate governance, for better business performance. While the focus is on Vietnam, the content is also relevant to the role of the State in other emerging markets as a player in shaping the business strategy, model, and direction of SOEs.
Author(s): Giang Hoang, Kok Boon Oh
Publisher: Springer
Year: 2023
Language: English
Pages: 256
City: Singapore
Preface
Acknowledgements
Contents
About the Authors
Abbreviations
Technical Terms
List of Figures
List of Tables
1 Introduction
1.1 Introduction
1.2 Motivation of the Research
1.3 Research Objectives, Scope, and Methodology
1.3.1 Research Objectives
1.3.2 Research Scope and Methodology
1.4 Significance and Contribution
1.5 Overview of Chapters
References
2 Role of Vietnam in a Changing Global Economy
2.1 Introduction
2.2 Vietnam as an Emerging Market
2.2.1 Economic Background
2.2.2 State-Owned Enterprise Reform
2.2.3 Private Enterprise Development
2.2.4 Foreign Investment Flow
2.2.5 Development of the Vietnam Stock Market
2.2.6 GDP Growth
2.2.7 Role of Sovereign Wealth Funds
2.3 Vietnam as a Global Economic Player
2.3.1 SOEs and International Business
2.3.2 Global Supply Chains
2.3.3 Trade Policies
2.3.4 SOEs and Global Supply Chain Governance
2.3.5 Transformation into the Digital Economy
2.4 Summary
References
3 Literature on Corporate Governance and Ownership Structure
3.1 Introduction
3.2 Theoretical Perspectives on Corporate Governance
3.2.1 The Concepts and Theories of Corporate Governance
3.2.2 Emergence of the Concepts of Corporate Governance
3.2.3 Corporate Governance Mechanisms: Solutions to Agency Problem
3.3 Theoretical Perspective on Board of Directors
3.3.1 The Concept of Board of Directors
3.3.2 Approach to Studies of Board of Directors
3.3.3 Empirical Studies on the Relationship Between Board Characteristics and Firm Performance
3.3.4 Theoretical Perspective on Chairman Characteristics
3.4 Theoretical Perspective on Ownership Structure
3.4.1 Ownership Concentration
3.4.2 Insider Ownership
3.4.3 Owner Identity
3.4.4 State Ownership
3.5 Studies of Board of Directors, Ownership and Chairman Attributes in Vietnam
3.6 Summary
References
4 Vietnam’s Corporate Governance, Regulatory and Institutional Settings
4.1 Introduction
4.2 The Concept of Corporate Governance and Key Features of the Corporate Sector in Vietnam
4.3 Legal and Regulatory Framework and Best Practices of Corporate Governance
4.3.1 The Law on Enterprise 2005 and Its Amendments: The Most Fundamental Corporate Governance Regulation
4.3.2 Listing Rules by Securities Regulators, Accounting, and Auditing Standards
4.3.3 Codes of Corporate Governance
4.3.4 Manual of Corporate Governance
4.4 The General Governance of Structure of a Shareholding Company
4.5 Preliminary Evaluation of the Corporate Governance System in Vietnam
4.6 Ownership Structure of the Listed Companies in Vietnam
4.7 Summary
References
5 The Effect of Board of Directors, Chairman, and Ownership Attributes on the Agency Cost: Empirical Evidence
5.1 Introduction
5.2 Research Question and Hypothesis Development
5.2.1 Hypothesis for Board of Directors
5.2.2 Hypothesis Development for Chairman Attributes
5.2.3 Hypothesis Development for Ownership Attributes
5.3 Research Methodology and Variable Description
5.3.1 Descriptive Analysis and Univariate Testing
5.3.2 Panel Data
5.3.3 Variable Measurement
5.4 Sample Selection and Data Source
5.4.1 Sample Selection
5.4.2 Data Source
5.5 Empirical Evidence
5.5.1 Univariate Analysis: Descriptive Statistics
5.5.2 Bivariate Analysis
5.5.3 Multivariate Analysis
5.6 Endogeneity and Further Robustness Check
5.6.1 The GMM Estimator
5.6.2 The DID Estimation
5.7 Summary
References
6 Government in Business: An Analysis of the State Capital Investment Corporation
6.1 Introduction
6.2 Research Questions, Hypothesis Development and Methodology
6.2.1 Research Questions and Hypothesis Development
6.2.2 Research Methodology
6.3 Sample Selection, Data Source and Descriptive Statistics
6.3.1 Sample Selection and Data Source
6.3.2 Univariate Analysis: Descriptive Statistics
6.4 Empirical Results
6.4.1 Empirical Result for Abnormal Returns to Shareholders—Univariate Analysis
6.4.2 SCIC Ownership and Shareholder Returns—Multiple Regression Analysis
6.5 Endogeneity and Further Robustness Check
6.5.1 Endogeneity and Robustness Check for the Relation Between SCIC Ownership and Stock Returns.
6.5.2 Robustness Check for the Relation Between Stock Returns for Buy, Sell and Appointment Announcements in the Two Ownership Classifications
6.6 Conclusion
References
7 Ownership and Governance: Implications for Policymakers and Practitioners Doing Business in Vietnam
7.1 Introduction
7.2 Outlook of Vietnam and Challenges Ahead
7.2.1 Economic Development Goals
7.2.2 Challenges Ahead
7.3 Analysis of the Results of Our Research and Their Implications
7.3.1 Effect of Appointment of Foreigners to the Supervisory Board on Agency Cost Reduction
7.3.2 Effect on Presence of Multiple Representatives on Board of Directors, Non-Executive Directors, and Independent Directors on Agency Cost Reduction
7.3.3 Positive Impact of Largest Shareholder Ownership on Reducing Agency Cost
7.3.4 Negative Link Between Second Large Shareholder’s Ownership and Agency Cost Reduction
7.3.5 Findings on the SCIC
7.3.6 Chairman’s Employment Tenure and Title
7.3.7 No Statistical Evidence of Impact of Foreign Ownership on Agency Costs
7.4 Suggestions
7.4.1 Suggestions for Policymakers and Regulatory Bodies in Vietnam
7.4.2 Suggestions for Practitioners
7.5 Summary
References
8 An Effective Business Model and Concluding Thoughts
8.1 Introduction
8.2 Summary of Results, Effective Model, and Nexus Between Governance Drawback Mitigation and Our Findings
8.2.1 Summary of Results, Proposed Effective Model and Governance Drawback Mitigation
8.2.2 Nexus Between Governance Mechanism Drawback Mitigation and Findings from Our Study
8.2.3 Future Consideration for Governance Issues in Vietnam
8.3 Limitations of the Study
8.4 Suggestions for Further Research
8.5 Closing Thoughts
References
Appendices
Appendix 1: Legal and Regulatory Framework for Corporate Governance in Vietnam
Appendix 2: Difference in Rights According to the Shareholding (Extraction from the Enterprise Law 2020)
Appendix 3: Key Updates on Disclosure and Corporate Social Responsibility/ESG
Appendix 4: Initial Transfer of Large Vietnamese SOEs to the Commission for the Management of State Capital at Enterprises in 2018
Appendix 5: Summary of Studies on the Relationship Between Ownership and Firm Performance
Appendix 6: The Results of the Hausman Test
Appendix 7: The Result of Falsification Testing Under the DID Estimation
