Does Ownership Structure Affect Firm Performance? Evidence from Vietnamese Stock Market

Abstract

This paper studies the effect of ownership structure on firm performance of Vietnamese manufacturing companies listed on Ho Chi Minh Stock Exchange (HOSE) during 2007-2015. Ownership structure is examined in three disparate aspects: managerial ownership, block ownership and state ownership. System-GMM is employed to address the endogeneity of ownership structure, as well as dynamic nature of its relationship with firm performance. The empirical results show a cubic relationship between managerial ownership and Tobin’s Q, i.e. positive at low and high level of managerial ownership, and negative at the middle. Meanwhile, block ownership has no impact on firm performance, implying the more important role of building internal incentives comparing to external monitoring in corporate governance. On the other hand, we also found an inverted U-shaped relationship between state ownership and Tobin’s Q, indicating that partial privatization could be an efficient way to improve firm performance.