Politically connected boards and firm performance: The case of Vietnam
Nội dung chính của bài viết
Tóm tắt
The paper examines the influence of Politically Connected Boards on Firm Performance in Vietnamese economy. Using the ordinary least square, fixed effect model, random effect model, and the comparison between the groups using sample T-test technique to examine the impact of political connections on the firm value. The findings reveal that firms with political ties exhibit reduced productivity, as evidenced by lower total factor productivity scores. Moreover, political connections hinder profitability, particularly for firms with modest earnings. Despite enjoying higher market value, politically connected firms suffer from decreased performance due to inefficiency and ineffectiveness. These results have important implications for investors, listed firms, and policymakers on the effects of political favoritism in transitional economies.
Chi tiết bài viết
Từ khóa
Political connections, Firm productivity, Firm profitability, Firm value
Tài liệu tham khảo
Faccio, M., 2003. Politically Connected Firms. SSRN Electronic Journal.
Choi, J. and Thum, M., 2008. The Economics of Politically connected Firms. SSRN Electronic Journal.
Chen, S., Yan, X. and Yang, B., 2020. Move to success? Headquarters relocation, political favoritism, and corporate performance. Journal of Corporate Finance, 64, p.101698.
Aguilera, R., Duran, P., Heugens, P., Sauerwald, S., Turturea, R. and VanEssen, M., 2021. State ownership, political ideology, and firm performance around the world. Journal of World Business, 56(1), p.101113.
Li, X. and Jin, Y., 2020. Do political connections improve corporate performance? Evidence from Chinese listed companies. Finance Research Letters, p.101871.
Faccio, M., 2009. Differences between Politically Connected and Non-Connected Firms: A Cross Country Analysis. SSRN Electronic Journal.
Taouab, O. and Issor, Z., 2019. Firm Performance: Definition and Measurement Models. European Scientific Journal ESJ, 15(1).
Guerra Pérez, S., Bona Sánchez, C. and Santana Martín, D., 2015. Politically connected firms in Spain. BRQ Business Research Quarterly, 18(4), pp.230-245.
Xepapadeas, A. and Vouvaki, D., 2009. Total Factor Productivity Growth When Factors of Production Generate Environmental Externalities. SSRN Electronic Journal.
Guerra Pérez, S., Bona Sánchez, C. and Santana Martín, D., 2015. Politically connected firms in Spain. BRQ Business Research Quarterly, 18(4), pp.230-245.
Dao, B., 2013. Political Connection in Corporate Governance and Bank Performance in Vietnam. SSRN Electronic Journal.
Li, H., Meng, L., Wang, Q. and Zhou, L., 2008. Political connections, financing and firm performance: Evidence from Chinese private firms. Journal of Development Economics, 87(2), pp.283-299.
Ngo, Q. and Tran, Q., 2020. Firm heterogeneity and total factor productivity: New panel-data evidence from Vietnamese manufacturing firms. Management Science Letters, pp.1505-1512.
Niessen, A. and Ruenzi, S., 2010. Political Connectedness and Firm Performance: Evidence from Germany. German Economic Review, 11(4), pp.441-464.
Saeed, A., Belghitar, Y. and Clark, E., 2015. Do Political Connections Affect Firm Performance? Evidence from a Developing Country. Emerging Markets Finance and Trade, 52(8), pp.1876-1891.
Wong, S., 2010. Political Connections and Firm Performance: The Case of Hong Kong. Journal of East Asian Studies, 10(2), pp.275-314.
Haris, Yao, Tariq, Javaid and Ain, 2019. Corporate Governance, Political Connections, and Bank Performance. International Journal of Financial Studies, 7(4), p.62.
Goldman, E., So, J. and Rocholl, J., 2006. Do Politically Connected Boards Affect Firm Value ?. SSRN Electronic Journal.
Ang, J., Ding, D. and Thong, T., 2011. Political Connection and Firm Value. SSRN Electronic Journal.
Nguyen, T. L. and V. C. Nguyen. “The Determinants of Profitability in Listed Enterprises: A Study from Vietnamese Stock Exchange.” Journal of Asian Finance, Economics and Business 7 (2020): 47-58.
Ha, P. and Frömmel, M., 2020. Political connection heterogeneity and firm value in Vietnam. Cogent Business & Management, 7(1), p.1738202.
Vu, Nguyen, Ho and Vuong, 2019. Determinants of Vietnamese Listed Firm Performance: Competition, Wage, CEO, Firm Size, Age, and International Trade. Journal of Risk and Financial Management, 12(2), p.62.
Nguyen, T., Tran, T. and Do, L., 2018. Government Support and Firm Profitability in Vietnam. Comparative Economic Research. Central and Eastern Europe, 21(4), pp.105-120.
Furno, M., 1997. A Robust Heteroskedasticity Consistent Covariance Matrix Estimator. Statistics, 30(3), pp.201-219.
Agrawal, Anup, and Charles Knoeber. 2001. Do Some Outside Directors Play a Political Role? Journal of Law and Economics 44(1): 179–98.
Ang, James, and Carol Boyer. 2007. Finance and Politics: The Wealth Effects of Special Interest Group Influence during the Nationalization and Privatization of Conrail. Cambridge Journal of Economics 31(2): 193–216.
Ang, James, and David Ding. 2006. Government Ownership and the Performance of Government-Linked Companies: The Case of Singapore. Journal of Multinational Financial Management 16(1): 64–88.
Ha, N.T., & Minh, B.T. 2020. Determinants of Firm Value in Vietnam: A Research Framework. International Journal of Science and Research (IJSR, Volume 9 Issue 1, January 2020, 626 – 631.
Black, Bernard, Hasung Jang, and Woochan Kim. 2006. Does Corporate Governance Affect Firm Value? Evidence from Korea. Journal of Law, Economics, and Organization 22(2): 366–413.
Chong, Alberto, and Florencio Lopez-de-Silanes. 2006. Corporate Governance and Firm Value in Mexico. IADB Working Paper No. 564. Washington, DC: Inter-American Development Bank.
Chung, Kee, and Stephen Pruitt. 1994. A Simple Approximation of Tobin’s Q. Financial Management 23(3): 70–74.
Claessens Stijn, Simeon Djankov, and Larry Lang. 2000. The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics 58(1–2): 81–112. della Porta, Donatella, and Alberto Vannucci. 1997. The ‘Perverse Effects’ of Political Corruption. Political Studies 45(3): 516–38.
Ferguson, Thomas, and Hans-Joachim Voth. 2008. Betting on Hitler—The Value of Political Connections in Nazi Germany. Quarterly Journal of Economics 123(1): 101–37.
Fisman, Raymond. 2001. Estimating the Value of Political Connections. American Economic Review 91(4): 1092–1102.
Friedman, Thomas. 1999. The Lexus and the Olive Tree. London: Harper Collins.
Goldman, Eitan, Jorg Rocholl, and Jongil So. 2009. Do Politically Connected Boards Affect Firm Value? Review of Financial Studies 22(6): 2331–60.
Hellman, Joel, Geraint Jones, and Daniel Kaufmann. 2000. Seize the State, Seize the Day. State Capture, Corruption and Influence in Transition. Policy Research Working Paper No. 2444. Washington, DC: World Bank.
Imai, Masami. 2006. Mixing Family Business with Politics. Asian Economic Journal 20(3): 241–56.
Johnson, Simon, Kalpana Kochhar, Todd Mitton, and Natalia Tamirisa. 2006. Malaysian Capital Controls: Macroeconomics and Institutions. IMF Working Paper No. WP/06/51. Washington, DC: International Monetary Fund.
Khwaja, Asim Ijaz, and Atif Mian. 2004. Do Lenders Favor Politically Connected Firms? Rent Provision in and Emerging Financial Market. Quarterly Journal of Economics 120(4): 1371–1411.
Leuz, Christian, and Felix Oberholzer-Gee. 2006. Political Relationships, Global Financing, and Corporate Transparency: Evidence from Indonesia. Journal of Financial Economics 81(2): 411–39.
Li Donghui, Fariborz Moshirian, Pascal Nguyen, and Li-wen Tan. 2007. Corporate Governance and Globalization: An Analysis of CEO Compensation in China. Research in International Business and Finance 21(1): 32–49.
Morck, Randall, Andrei Shleifer, and Robert Vishny. 1998. Management Ownership and Market Valuation: An Empirical Analysis. Journal of Financial Economics 20(1–2): 293–316.
Choi, J. and Thum, M., 2008. The Economics of Politically connected Firms. SSRN Electronic Journal.
Chen, S., Yan, X. and Yang, B., 2020. Move to success? Headquarters relocation, political favoritism, and corporate performance. Journal of Corporate Finance, 64, p.101698.
Aguilera, R., Duran, P., Heugens, P., Sauerwald, S., Turturea, R. and VanEssen, M., 2021. State ownership, political ideology, and firm performance around the world. Journal of World Business, 56(1), p.101113.
Li, X. and Jin, Y., 2020. Do political connections improve corporate performance? Evidence from Chinese listed companies. Finance Research Letters, p.101871.
Faccio, M., 2009. Differences between Politically Connected and Non-Connected Firms: A Cross Country Analysis. SSRN Electronic Journal.
Taouab, O. and Issor, Z., 2019. Firm Performance: Definition and Measurement Models. European Scientific Journal ESJ, 15(1).
Guerra Pérez, S., Bona Sánchez, C. and Santana Martín, D., 2015. Politically connected firms in Spain. BRQ Business Research Quarterly, 18(4), pp.230-245.
Xepapadeas, A. and Vouvaki, D., 2009. Total Factor Productivity Growth When Factors of Production Generate Environmental Externalities. SSRN Electronic Journal.
Guerra Pérez, S., Bona Sánchez, C. and Santana Martín, D., 2015. Politically connected firms in Spain. BRQ Business Research Quarterly, 18(4), pp.230-245.
Dao, B., 2013. Political Connection in Corporate Governance and Bank Performance in Vietnam. SSRN Electronic Journal.
Li, H., Meng, L., Wang, Q. and Zhou, L., 2008. Political connections, financing and firm performance: Evidence from Chinese private firms. Journal of Development Economics, 87(2), pp.283-299.
Ngo, Q. and Tran, Q., 2020. Firm heterogeneity and total factor productivity: New panel-data evidence from Vietnamese manufacturing firms. Management Science Letters, pp.1505-1512.
Niessen, A. and Ruenzi, S., 2010. Political Connectedness and Firm Performance: Evidence from Germany. German Economic Review, 11(4), pp.441-464.
Saeed, A., Belghitar, Y. and Clark, E., 2015. Do Political Connections Affect Firm Performance? Evidence from a Developing Country. Emerging Markets Finance and Trade, 52(8), pp.1876-1891.
Wong, S., 2010. Political Connections and Firm Performance: The Case of Hong Kong. Journal of East Asian Studies, 10(2), pp.275-314.
Haris, Yao, Tariq, Javaid and Ain, 2019. Corporate Governance, Political Connections, and Bank Performance. International Journal of Financial Studies, 7(4), p.62.
Goldman, E., So, J. and Rocholl, J., 2006. Do Politically Connected Boards Affect Firm Value ?. SSRN Electronic Journal.
Ang, J., Ding, D. and Thong, T., 2011. Political Connection and Firm Value. SSRN Electronic Journal.
Nguyen, T. L. and V. C. Nguyen. “The Determinants of Profitability in Listed Enterprises: A Study from Vietnamese Stock Exchange.” Journal of Asian Finance, Economics and Business 7 (2020): 47-58.
Ha, P. and Frömmel, M., 2020. Political connection heterogeneity and firm value in Vietnam. Cogent Business & Management, 7(1), p.1738202.
Vu, Nguyen, Ho and Vuong, 2019. Determinants of Vietnamese Listed Firm Performance: Competition, Wage, CEO, Firm Size, Age, and International Trade. Journal of Risk and Financial Management, 12(2), p.62.
Nguyen, T., Tran, T. and Do, L., 2018. Government Support and Firm Profitability in Vietnam. Comparative Economic Research. Central and Eastern Europe, 21(4), pp.105-120.
Furno, M., 1997. A Robust Heteroskedasticity Consistent Covariance Matrix Estimator. Statistics, 30(3), pp.201-219.
Agrawal, Anup, and Charles Knoeber. 2001. Do Some Outside Directors Play a Political Role? Journal of Law and Economics 44(1): 179–98.
Ang, James, and Carol Boyer. 2007. Finance and Politics: The Wealth Effects of Special Interest Group Influence during the Nationalization and Privatization of Conrail. Cambridge Journal of Economics 31(2): 193–216.
Ang, James, and David Ding. 2006. Government Ownership and the Performance of Government-Linked Companies: The Case of Singapore. Journal of Multinational Financial Management 16(1): 64–88.
Ha, N.T., & Minh, B.T. 2020. Determinants of Firm Value in Vietnam: A Research Framework. International Journal of Science and Research (IJSR, Volume 9 Issue 1, January 2020, 626 – 631.
Black, Bernard, Hasung Jang, and Woochan Kim. 2006. Does Corporate Governance Affect Firm Value? Evidence from Korea. Journal of Law, Economics, and Organization 22(2): 366–413.
Chong, Alberto, and Florencio Lopez-de-Silanes. 2006. Corporate Governance and Firm Value in Mexico. IADB Working Paper No. 564. Washington, DC: Inter-American Development Bank.
Chung, Kee, and Stephen Pruitt. 1994. A Simple Approximation of Tobin’s Q. Financial Management 23(3): 70–74.
Claessens Stijn, Simeon Djankov, and Larry Lang. 2000. The Separation of Ownership and Control in East Asian Corporations. Journal of Financial Economics 58(1–2): 81–112. della Porta, Donatella, and Alberto Vannucci. 1997. The ‘Perverse Effects’ of Political Corruption. Political Studies 45(3): 516–38.
Ferguson, Thomas, and Hans-Joachim Voth. 2008. Betting on Hitler—The Value of Political Connections in Nazi Germany. Quarterly Journal of Economics 123(1): 101–37.
Fisman, Raymond. 2001. Estimating the Value of Political Connections. American Economic Review 91(4): 1092–1102.
Friedman, Thomas. 1999. The Lexus and the Olive Tree. London: Harper Collins.
Goldman, Eitan, Jorg Rocholl, and Jongil So. 2009. Do Politically Connected Boards Affect Firm Value? Review of Financial Studies 22(6): 2331–60.
Hellman, Joel, Geraint Jones, and Daniel Kaufmann. 2000. Seize the State, Seize the Day. State Capture, Corruption and Influence in Transition. Policy Research Working Paper No. 2444. Washington, DC: World Bank.
Imai, Masami. 2006. Mixing Family Business with Politics. Asian Economic Journal 20(3): 241–56.
Johnson, Simon, Kalpana Kochhar, Todd Mitton, and Natalia Tamirisa. 2006. Malaysian Capital Controls: Macroeconomics and Institutions. IMF Working Paper No. WP/06/51. Washington, DC: International Monetary Fund.
Khwaja, Asim Ijaz, and Atif Mian. 2004. Do Lenders Favor Politically Connected Firms? Rent Provision in and Emerging Financial Market. Quarterly Journal of Economics 120(4): 1371–1411.
Leuz, Christian, and Felix Oberholzer-Gee. 2006. Political Relationships, Global Financing, and Corporate Transparency: Evidence from Indonesia. Journal of Financial Economics 81(2): 411–39.
Li Donghui, Fariborz Moshirian, Pascal Nguyen, and Li-wen Tan. 2007. Corporate Governance and Globalization: An Analysis of CEO Compensation in China. Research in International Business and Finance 21(1): 32–49.
Morck, Randall, Andrei Shleifer, and Robert Vishny. 1998. Management Ownership and Market Valuation: An Empirical Analysis. Journal of Financial Economics 20(1–2): 293–316.