Ownership Concentration, Corporate Risk-Taking and Performance: Evidence from Vietnamese Listed Firms

Abstract

This study examines the associations of corporate governance with firm risk-taking and performance in a typical frontier equity market characterized by high ownership concentration and weak investor protection rights. Using an extensive dataset of 502 Vietnamese publicly listed firms over the period 2008-2015, we find no relation between ownership concentration and accounting-based measure of performance, but a (seemingly u-shaped) non-linear relation between ownership concentration and market-based measure of performance. Our results also show that a highly concentrated structure of ownership tends to increase the riskiness of accounting performance, recognizing an indirect channel of the influence of ownership concentration on firm profitability. However, there is no evidence of the linkage between ownership distribution and the riskiness of market performance, implying that the concentration – valuation relationship may not be shaped by risk-taking behavior. Ultimately, our findings confirm essential differences in using the two alternatives of performance measurement.

Keywords: corporate governance, ownership structure, firm performance, risk-taking, Vietnam

JEL Classification: G30, G32, G34