The monitoring role of nonexecutive directors in Vietnam from a return-volatility perspective

Abstract

This study examines the relevance of board independence to stock return volatility for a sample of 160 companies listed on the Vietnamese stock market over ten years (2008-2017). After controlling for potential endogeneity, we find that the presence of non-executive directors on the board tends to increase firm risk. The results indicate that non-executive directors do not play a supervisory role under the agency theory. Our findings remain robust when we apply alternative measures of the dependent variable.