The Impact of Corporate Governance on Firm Performance: Empirical Study in Vietnam

Abstract

This empirical research for listed firms in Vietnam is conducted to examine the relationship between corporate governance and firm performance. In this study, corporate governance is proxied by a set of variables, including a dual role of the CEO, board's size, board independence and ownership concentration. In addition, firm performance is measured by four different methods which are (i) return on asset (ROA), (ii) return on equity (ROE), (iii) Z-score by Altman (1968) and (iv) Tobin's Q. Using the Feasible Generalized Least Squares (FGLS) on the dataset of 177 listed companies in Vietnam for the period of 5 years, from 2008 to 2012, the findings of this study indicate multiple effects of corporate governance on firm performance. First, duality role of the CEO is positively correlated with firm performance. Second, there is a structural change in relation between managerial ownership and firm performance. Third, board independence has opposite impacts on firm performance. Fourth, this study however fails to provide an empirical evidence support the statistically significant relationship between board size and firm performance.