Impact of corporate governance on financial performance: The case of listed warehouse transportation firms in emerging economy

Duc Tai Do,Thi Thuy Hang Pham,Manh Dung Tran,Binh Minh Tran

doi:10.22495/cgobrv5i2p3

Abstract

Corporate governance structures are expected to help a firm have better financial performance through giving proper decision-making (Shivani, Jain, & Yadav, 2017). In recent years, along with the completing process of the business environment, the corporate governance framework in Vietnam has also been gradually built and implemented. However, corporate governance in Vietnam still has some limitations. This study is conducted to investigate the impact level of corporate governance on the financial performance of warehouse transportation firms listed on the Hanoi Stock Exchange (HNX) of Vietnam. We employ both qualitative and quantitative methods for processing data collected from twenty-two listed firms. The results reveal that determinant of corporate governance including the nationality of the board (NB), board composition (BC) has a negative relationship with financial performance; the remaining determinants, such as board size (BS), professional qualifications of the board (BE), the proportion of women (PW), the average age of the board (AA), general director concurrently of the board chairman (PO), do not influence financial performance. However, this impact level changes when we put some controlled variables in the model. In addition, the controlled variable of enterprise continuous uptime (COT) also has a negative impact on financial performance. Based on the findings, some recommendations are proposed relating to corporate governance for enhancing the financial performance of listed warehouse transportation firms in Vietnam

Highlights

Corporate governance is viewed as the internal measures to run and control a company, relating to the relationships between the board of directors, shareholders, and stakeholders
The results reveal that determinant of corporate governance including the nationality of the board (NB), board composition (BC) has a negative relationship with financial performance; the remaining determinants, such as board size (BS), professional qualifications of the board (BE), the proportion of women (PW), the average age of the board (AA), general director concurrently of the board chairman (PO), do not influence financial performance
This study is done for investigating the impact level of corporate governance on financial performance in logistics firms listed on the Hanoi Stock Exchange (HNX) in the context of Vietnam

Summary

Introduction

Corporate governance is viewed as the internal measures to run and control a company, relating to the relationships between the board of directors, shareholders, and stakeholders. Corporate governance creates a structure for setting goals and identifying the means to achieve the goals, as well as for monitoring firm performance (OECD, 2004). Corporate governance is regarded as a means to reduce agency costs, thereby improving management transparency and increasing firm performance (Bruno & Claessens, 2010). The internal determinant is the establishment of a structure to control the behavior of preparing and disclosing financial statements. According to Cohen, Krishnamoorthy, and Wright (2004), internal determinants include board of directors (size, independent members, authority, experts, frequency of meetings); audit committee (independent, experienced, and specialized members; the presence of internal audit in the corporate structure)

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Conclusion