Board Independence and Financial Performance: Empirical Evidence on Mediating Role of Market Competition From the Vietnamese Market
Purpose: The aim of this study is to examine the effect of board independence on the financial performance of companies listed on the Vietnamese stock exchanges with the mediating role of market competition. Theoretical framework: The topic is based on agency theory, resource dependency theory and...
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| Veröffentlicht in: | International Journal of Professional Business Review 2023-05, Vol.8 (5), p.e01498 |
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| container_title | International Journal of Professional Business Review |
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| creator | Ngo, My Tran Le, Tan Nghiem Nguyen, Ngoc Tu Luu, Thi Thai Tam |
| description | Purpose: The aim of this study is to examine the effect of board independence on the financial performance of companies listed on the Vietnamese stock exchanges with the mediating role of market competition.
Theoretical framework: The topic is based on agency theory, resource dependency theory and stewardship theory. The independence of the board of directors (BOD) is measured in two aspects: the duality and the non-executive members of BOD. This study approaches the measurement of market competition according to the Herfindahl-Hirschman index (HHI). After calculating the HHI, the study will classify companies in a highly competitive market or a low competitive market.
Design/methodology/approach: The study uses secondary data from the financial statements of companies listed on the Vietnamese stock market with the collection period from 2016 to 2020. The data analysis methods comprise of Pooled ordinary least squares (OLS), Fixed effects model (FEM), Random effects model (REM) and Generalized method of moments estimation (GMM).
Findings: The results of GMM showed that CEO duality is found to have a negative effect on the financial performance of listed firms. Meanwhile, the statistical evidence shows that the percentage of non-executive board members and market competition positively affect the financial performance. In addition, the evidence showed that market competition could reduce the positive influence of the percentage of non-executive board members on financial performance of listed companies.
Research, Practical & Social implications: The study has proposed some governance implications to improve the financial performance of listed firms such as limiting CEO duality, increasing the percentage of non-executive board members and empower the management board in a highly competitive market and choosing the appropriate size of the board.
Originality/value: The value of the study is to provide more scientific basis for policy makers in Vietnam and help listed companies choose and make decisions related to BOD to improve financial efficiency. |
| doi_str_mv | 10.26668/businessreview/2023.v8i5.1498 |
| format | Article |
| fullrecord | <record><control><sourceid>dialnet_cross</sourceid><recordid>TN_cdi_dialnet_primary_oai_dialnet_unirioja_es_ART0001601571</recordid><sourceformat>XML</sourceformat><sourcesystem>PC</sourcesystem><sourcerecordid>oai_dialnet_unirioja_es_ART0001601571</sourcerecordid><originalsourceid>FETCH-LOGICAL-c1648-f114f1238241f772ddaf34cf4c727948b5fcbec910bfeb5822e882bf96828ec93</originalsourceid><addsrcrecordid>eNpVkV9LwzAUxYsoOOa-Q55865ak_1IRYY5NBxvKmL6GNL3RzDYZaTfx2S9u6qboS25yOOeSe39BcEnwkKZpykbFrtEGmsbBXsP7iGIaDfdMJ0MS5-wk6NGEJmGUJvHpn_t5MGiaDcaY4hyTPO0Fn7dWuBLNTQlb8IeRgIQp0UwbYaQWFXoEp6yr_Quu0LTeaqell6d7fXBbg5ZQatFq84JWtvKKQkvh3qBFE1tvodWt9qaZszVqXwE9a2iNqKGBo-0iOFOiamBwrP3gaTZdT-7DxcPdfDJehJKkMQsVIbEiNGI0JirLaFkKFcVSxTKjWR6zIlGyAJkTXCgoEkYpMEYLlaeMMq9H_eD60Nf_tjLQ8q3TtXAf3ArNf7Sd8QPajeDQ8PFq7XdFUkySjPj4zSEune32rn7zBPNvKPw_FN5B4R0U3kGJvgBPW4lc</addsrcrecordid><sourcetype>Open Website</sourcetype><iscdi>true</iscdi><recordtype>article</recordtype></control><display><type>article</type><title>Board Independence and Financial Performance: Empirical Evidence on Mediating Role of Market Competition From the Vietnamese Market</title><source>Dialnet</source><source>Alma/SFX Local Collection</source><creator>Ngo, My Tran ; Le, Tan Nghiem ; Nguyen, Ngoc Tu ; Luu, Thi Thai Tam</creator><creatorcontrib>Ngo, My Tran ; Le, Tan Nghiem ; Nguyen, Ngoc Tu ; Luu, Thi Thai Tam</creatorcontrib><description>Purpose: The aim of this study is to examine the effect of board independence on the financial performance of companies listed on the Vietnamese stock exchanges with the mediating role of market competition.
Theoretical framework: The topic is based on agency theory, resource dependency theory and stewardship theory. The independence of the board of directors (BOD) is measured in two aspects: the duality and the non-executive members of BOD. This study approaches the measurement of market competition according to the Herfindahl-Hirschman index (HHI). After calculating the HHI, the study will classify companies in a highly competitive market or a low competitive market.
Design/methodology/approach: The study uses secondary data from the financial statements of companies listed on the Vietnamese stock market with the collection period from 2016 to 2020. The data analysis methods comprise of Pooled ordinary least squares (OLS), Fixed effects model (FEM), Random effects model (REM) and Generalized method of moments estimation (GMM).
Findings: The results of GMM showed that CEO duality is found to have a negative effect on the financial performance of listed firms. Meanwhile, the statistical evidence shows that the percentage of non-executive board members and market competition positively affect the financial performance. In addition, the evidence showed that market competition could reduce the positive influence of the percentage of non-executive board members on financial performance of listed companies.
Research, Practical & Social implications: The study has proposed some governance implications to improve the financial performance of listed firms such as limiting CEO duality, increasing the percentage of non-executive board members and empower the management board in a highly competitive market and choosing the appropriate size of the board.
Originality/value: The value of the study is to provide more scientific basis for policy makers in Vietnam and help listed companies choose and make decisions related to BOD to improve financial efficiency.</description><identifier>ISSN: 2525-3654</identifier><identifier>EISSN: 2525-3654</identifier><identifier>DOI: 10.26668/businessreview/2023.v8i5.1498</identifier><language>eng</language><subject>Board Independence ; Financial Performance ; GMM ; Market Competition ; Tobin's Q</subject><ispartof>International Journal of Professional Business Review, 2023-05, Vol.8 (5), p.e01498</ispartof><rights>LICENCIA DE USO: Los documentos a texto completo incluidos en Dialnet son de acceso libre y propiedad de sus autores y/o editores. Por tanto, cualquier acto de reproducción, distribución, comunicación pública y/o transformación total o parcial requiere el consentimiento expreso y escrito de aquéllos. Cualquier enlace al texto completo de estos documentos deberá hacerse a través de la URL oficial de éstos en Dialnet. Más información: https://dialnet.unirioja.es/info/derechosOAI | INTELLECTUAL PROPERTY RIGHTS STATEMENT: Full text documents hosted by Dialnet are protected by copyright and/or related rights. This digital object is accessible without charge, but its use is subject to the licensing conditions set by its authors or editors. Unless expressly stated otherwise in the licensing conditions, you are free to linking, browsing, printing and making a copy for your own personal purposes. All other acts of reproduction and communication to the public are subject to the licensing conditions expressed by editors and authors and require consent from them. Any link to this document should be made using its official URL in Dialnet. More info: https://dialnet.unirioja.es/info/derechosOAI</rights><lds50>peer_reviewed</lds50><oa>free_for_read</oa><woscitedreferencessubscribed>false</woscitedreferencessubscribed><orcidid>0000-0002-3010-9467 ; 0000-0001-8332-6388 ; 0000-0002-5171-1684 ; 0009-0002-3687-8985</orcidid></display><links><openurl>$$Topenurl_article</openurl><openurlfulltext>$$Topenurlfull_article</openurlfulltext><thumbnail>$$Tsyndetics_thumb_exl</thumbnail><link.rule.ids>314,780,784,874,27922,27923</link.rule.ids></links><search><creatorcontrib>Ngo, My Tran</creatorcontrib><creatorcontrib>Le, Tan Nghiem</creatorcontrib><creatorcontrib>Nguyen, Ngoc Tu</creatorcontrib><creatorcontrib>Luu, Thi Thai Tam</creatorcontrib><title>Board Independence and Financial Performance: Empirical Evidence on Mediating Role of Market Competition From the Vietnamese Market</title><title>International Journal of Professional Business Review</title><description>Purpose: The aim of this study is to examine the effect of board independence on the financial performance of companies listed on the Vietnamese stock exchanges with the mediating role of market competition.
Theoretical framework: The topic is based on agency theory, resource dependency theory and stewardship theory. The independence of the board of directors (BOD) is measured in two aspects: the duality and the non-executive members of BOD. This study approaches the measurement of market competition according to the Herfindahl-Hirschman index (HHI). After calculating the HHI, the study will classify companies in a highly competitive market or a low competitive market.
Design/methodology/approach: The study uses secondary data from the financial statements of companies listed on the Vietnamese stock market with the collection period from 2016 to 2020. The data analysis methods comprise of Pooled ordinary least squares (OLS), Fixed effects model (FEM), Random effects model (REM) and Generalized method of moments estimation (GMM).
Findings: The results of GMM showed that CEO duality is found to have a negative effect on the financial performance of listed firms. Meanwhile, the statistical evidence shows that the percentage of non-executive board members and market competition positively affect the financial performance. In addition, the evidence showed that market competition could reduce the positive influence of the percentage of non-executive board members on financial performance of listed companies.
Research, Practical & Social implications: The study has proposed some governance implications to improve the financial performance of listed firms such as limiting CEO duality, increasing the percentage of non-executive board members and empower the management board in a highly competitive market and choosing the appropriate size of the board.
Originality/value: The value of the study is to provide more scientific basis for policy makers in Vietnam and help listed companies choose and make decisions related to BOD to improve financial efficiency.</description><subject>Board Independence</subject><subject>Financial Performance</subject><subject>GMM</subject><subject>Market Competition</subject><subject>Tobin's Q</subject><issn>2525-3654</issn><issn>2525-3654</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>2023</creationdate><recordtype>article</recordtype><sourceid>FKZ</sourceid><recordid>eNpVkV9LwzAUxYsoOOa-Q55865ak_1IRYY5NBxvKmL6GNL3RzDYZaTfx2S9u6qboS25yOOeSe39BcEnwkKZpykbFrtEGmsbBXsP7iGIaDfdMJ0MS5-wk6NGEJmGUJvHpn_t5MGiaDcaY4hyTPO0Fn7dWuBLNTQlb8IeRgIQp0UwbYaQWFXoEp6yr_Quu0LTeaqell6d7fXBbg5ZQatFq84JWtvKKQkvh3qBFE1tvodWt9qaZszVqXwE9a2iNqKGBo-0iOFOiamBwrP3gaTZdT-7DxcPdfDJehJKkMQsVIbEiNGI0JirLaFkKFcVSxTKjWR6zIlGyAJkTXCgoEkYpMEYLlaeMMq9H_eD60Nf_tjLQ8q3TtXAf3ArNf7Sd8QPajeDQ8PFq7XdFUkySjPj4zSEune32rn7zBPNvKPw_FN5B4R0U3kGJvgBPW4lc</recordid><startdate>20230524</startdate><enddate>20230524</enddate><creator>Ngo, My Tran</creator><creator>Le, Tan Nghiem</creator><creator>Nguyen, Ngoc Tu</creator><creator>Luu, Thi Thai Tam</creator><scope>AAYXX</scope><scope>CITATION</scope><scope>AGMXS</scope><scope>FKZ</scope><orcidid>https://orcid.org/0000-0002-3010-9467</orcidid><orcidid>https://orcid.org/0000-0001-8332-6388</orcidid><orcidid>https://orcid.org/0000-0002-5171-1684</orcidid><orcidid>https://orcid.org/0009-0002-3687-8985</orcidid></search><sort><creationdate>20230524</creationdate><title>Board Independence and Financial Performance: Empirical Evidence on Mediating Role of Market Competition From the Vietnamese Market</title><author>Ngo, My Tran ; Le, Tan Nghiem ; Nguyen, Ngoc Tu ; Luu, Thi Thai Tam</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c1648-f114f1238241f772ddaf34cf4c727948b5fcbec910bfeb5822e882bf96828ec93</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>2023</creationdate><topic>Board Independence</topic><topic>Financial Performance</topic><topic>GMM</topic><topic>Market Competition</topic><topic>Tobin's Q</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Ngo, My Tran</creatorcontrib><creatorcontrib>Le, Tan Nghiem</creatorcontrib><creatorcontrib>Nguyen, Ngoc Tu</creatorcontrib><creatorcontrib>Luu, Thi Thai Tam</creatorcontrib><collection>CrossRef</collection><collection>Dialnet (Open Access Full Text)</collection><collection>Dialnet</collection><jtitle>International Journal of Professional Business Review</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Ngo, My Tran</au><au>Le, Tan Nghiem</au><au>Nguyen, Ngoc Tu</au><au>Luu, Thi Thai Tam</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Board Independence and Financial Performance: Empirical Evidence on Mediating Role of Market Competition From the Vietnamese Market</atitle><jtitle>International Journal of Professional Business Review</jtitle><date>2023-05-24</date><risdate>2023</risdate><volume>8</volume><issue>5</issue><spage>e01498</spage><pages>e01498-</pages><issn>2525-3654</issn><eissn>2525-3654</eissn><abstract>Purpose: The aim of this study is to examine the effect of board independence on the financial performance of companies listed on the Vietnamese stock exchanges with the mediating role of market competition.
Theoretical framework: The topic is based on agency theory, resource dependency theory and stewardship theory. The independence of the board of directors (BOD) is measured in two aspects: the duality and the non-executive members of BOD. This study approaches the measurement of market competition according to the Herfindahl-Hirschman index (HHI). After calculating the HHI, the study will classify companies in a highly competitive market or a low competitive market.
Design/methodology/approach: The study uses secondary data from the financial statements of companies listed on the Vietnamese stock market with the collection period from 2016 to 2020. The data analysis methods comprise of Pooled ordinary least squares (OLS), Fixed effects model (FEM), Random effects model (REM) and Generalized method of moments estimation (GMM).
Findings: The results of GMM showed that CEO duality is found to have a negative effect on the financial performance of listed firms. Meanwhile, the statistical evidence shows that the percentage of non-executive board members and market competition positively affect the financial performance. In addition, the evidence showed that market competition could reduce the positive influence of the percentage of non-executive board members on financial performance of listed companies.
Research, Practical & Social implications: The study has proposed some governance implications to improve the financial performance of listed firms such as limiting CEO duality, increasing the percentage of non-executive board members and empower the management board in a highly competitive market and choosing the appropriate size of the board.
Originality/value: The value of the study is to provide more scientific basis for policy makers in Vietnam and help listed companies choose and make decisions related to BOD to improve financial efficiency.</abstract><doi>10.26668/businessreview/2023.v8i5.1498</doi><orcidid>https://orcid.org/0000-0002-3010-9467</orcidid><orcidid>https://orcid.org/0000-0001-8332-6388</orcidid><orcidid>https://orcid.org/0000-0002-5171-1684</orcidid><orcidid>https://orcid.org/0009-0002-3687-8985</orcidid><oa>free_for_read</oa></addata></record> |
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| subjects | Board Independence Financial Performance GMM Market Competition Tobin's Q |
| title | Board Independence and Financial Performance: Empirical Evidence on Mediating Role of Market Competition From the Vietnamese Market |
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