(LUẬN văn THẠC sĩ) the dynamic relationship between managerial ownership and firms performance in vietnams

UNIVERSITY OF ECONOMICS INSTITUDE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE DYNAMIC RELATIONSHIP BETWEEN MANAGERIAL OWNERSHIP AND FIRM’S PERFORMANCE IN VIETNAM BY NGUYEN THI THANH AN MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, NOVEMBER 2016 TIEU LUAN MOI download : skknchat@gmail.com UNIVERSITY OF ECONOMICS INSTITUDE OD SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE DYNAMIC RELATIONSHIP BETWEEN MANAGERIAL OWNERSHIP AND FIRM’S PERFORMANCE IN VIETNAM A thesis submitted in partial fulfillment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By NGUYEN THI THANH AN Academic Supervisor Dr VO HONG DUC Ho Chi Minh City, November 2016 TIEU LUAN MOI download : skknchat@gmail.com DECLARATION The work in this dissertation entitled “The dynamic relationship between managerial ownership and firm’s performance in Vietnam” which has been implemented by me to fulfill the requirement of Master of Art in Development Economics at Vietnam - The Netherlands Programme I hereby certify that this thesis is a result of my own efforts, and any sources would be acknowledged This is original research which have been submitted neither whole nor a part of research for any other degree HCMC, November, 2016 Nguyen Thi Thanh An i TIEU LUAN MOI download : skknchat@gmail.com ACKNOWLEDGEMENTS First of all, the thesis had implemented with the assistance and encouragement of my principal supervisor Dr Vo Hong Duc I would like to emphasize the thankful gratitude and appreciation to him His guidance helps me develop my dissertation throughout all stages of processing thesis He also devotes his valuable time for me and my team to encourage and share his experience in study as well as in real life In addition, I would like thank Dr Truong Dang Thuy who is patient and sympathetic in provision of econometric technique and supporting in any question My thanks also go to all of staffs at VNP, especially Ms Xuan Hong has already assisted the students with her dedication Furthermore, I also acknowledged all of classmates in Class 21 I had the opportunity to work and learn in an intimate and supportive class Above all, I most deeply thank to my parents who always support in any project and intention and love me without condition over 26 years HCMC, November, 2016 Nguyen Thi Thanh An ii TIEU LUAN MOI download : skknchat@gmail.com ABSTRACT Corporate governance is generally considered as a key factor for the operational success for enterprises One of the most frequently discussed concepts among corporate governance factors is the ownership structure, in particular, managerial ownership Various empirical studies have been conducted to consider and examine the impact of diverse ownership structure aspects on firm’s performance which is proxied by various dimensions including accounting return, market evaluation and probability of bankruptcy Findings from various empirical studies on the above issue are mixed due to the following reasons First, it is difficult to capture appropriately the power of managers in making decisions In the developing countries, managers also control the firm via the ownership of related parties As such, this study is conducted to measure managerial ownership in terms of (i) direct ownership and (ii) indirect ownership to achieve the better measurement Second, many authors argued that managerial ownership should be treated as endogenous parameter and the relationship between managerial ownership and firm’s performance is non-monotonic To deal with endogeneity of managerial ownership, this study focuses on the effect of the change in managerial ownership (managers’ decision to purchasing and selling stocks) on the change in firm’s performance To achieve these objectives, a panel data of 285 listed firms on Ho Chi Minh City Stock Exchange (HOSE) for the period from 2010 to 2015 is utilized Findings from this study indicate that the percentage of stocks owned by managers and their related parties significantly fluctuated In addition, the actual managerial ownership level tends to move away from the optimal level due to the existence of adjustment costs Furthermore, managers are likely to sell stock when the entire financial market performed well Notwithstanding, the managers not purchase stoFcks in the case of illiquid market and deteriorating performance Findings from this study also present evidence to confirm the view that the reduction of lagged managerial ownership level would send a signal in relation to the quality of firm, and would also provide the negative impact on firm’s performance regarding market evaluation However, the study fails to provide empirical evidence in relation to the change in managerial ownership against the change in firm’s return on total assets the accounting- based measurement Key words: Managerial ownership, Firm’s performance, Endogeneity, Market-based measurement, Accounting-based measurement iii TIEU LUAN MOI download : skknchat@gmail.com TABLE OF CONTENTS DECLARATION i ACKNOWLEDGEMENTS ii ABSTRACT iii TABLE OF CONTENTS iv LIST OF TABLES vii LIST OF FIGURES viii LIST OF ABBREVIATION ix CHAPTER INTRODUCTION 1.1 Problem statement 1.2 Research objectives 1.3 Research questions 1.4 Contributions of the thesis 1.5 Research Scope 1.6 Structure of the thesis CHAPTER LITERATURE REVIEW 2.1 The theoretical background of managerial ownership and firm’s performance 2.1.1 The agency approach 2.1.1.1 The incentive effect 2.1.1.2 The entrenchment effect 2.1.2 The managerial discretion approach 2.1.3 The timing approach 10 2.2 Endogeneity of managerial ownership 10 iv TIEU LUAN MOI download : skknchat@gmail.com 2.3 The empirical evidences of relationship between managerial ownership and firm’s performance and limitations 12 2.3.1 The research in worldwide and the limitations 12 2.3.1.1 The exogenous managerial ownership 12 2.3.1.2 The endogenous managerial ownership 14 2.3.2 The empirical evidence in Vietnam 17 2.4 The corporate governance of Vietnamese listed firms 18 2.5 The conceptual framework 21 CHAPTER RESEARCH METHODOLOGY AND DATA 22 3.1 Data sources 22 3.2 Measurement variables 23 3.2.1 Definition and measurements of firm’s performance 23 3.2.1.1 Accounting – based measurements 23 3.2.1.2 Market–based measurements 24 3.2.2 Definition and measurement of managerial ownership 24 3.3 Research methodology 25 3.4 The empirical model 26 3.4.1 The determinants of firm’s performance and optimal managerial ownership 26 3.4.1.1 The determinants of firm’s performance 26 3.4.1.2 The determinants of optimal managerial ownership level 28 3.4.1.3 The movement of actual managerial ownership 31 3.4.2 The explanation of the large change in managerial ownership 32 3.4.3 The dynamic relationship between managerial ownership and firm’s performance 34 CHAPTER RESULTS AND DISCUSSIONS 36 4.1 Data description 36 v TIEU LUAN MOI download : skknchat@gmail.com 4.1.1 Descriptive statistics 36 4.1.2 Correlation analysis 41 4.2 The determinants and movement of managerial ownership 41 4.2.1 The determinants of managerial ownership 44 4.2.2 The movement of actual managerial ownership 46 4.3 The explanation of the large change (decrease or increase) 47 4.3.1 The statistics by group 47 4.3.2 The likelihood regression of large change (increase or decrease) against the change in firms’ characteristics and market condition 50 4.4 Dynamics of managerial ownership and firm’s performance 53 4.4.1 Firm’s performance: accounting-based measurement 53 4.4.2 Firm’s performance: market-based measurement 55 CHAPTER CONCLUSIONS AND POLICY IMPLICATIONS 60 5.1 Concluding remarks 60 5.2 Policy implications 61 5.2.1 The implications for enterprises 61 5.2.2 The implications for Vietnam’s authority and the Government 62 5.3 The limitations and further research 62 5.3.1 The limitations 62 5.3.2 The further research 62 REFERENCES 64 APPENDICES 70 vi TIEU LUAN MOI download : skknchat@gmail.com LIST OF TABLES Table 3.1 Tests are ultilized to find the appropriate model 26 Table 3.2 The determinants of optimal managerial ownership level 28 Table 3.3 The summary of variables employed in Probit model 32 Table 4.1 Summary statistics of firm’s characteristics of 285 firms listed on HOSE from 2010 to 2015) period 37 Table 4.2 Statistical summary of variables separated by year 38 Table 4.3 Statistical summary of variables separated by industry 39 Table 4.4 Correlation coefficients between managerial ownership and firm’s attributes 40 Table 4.5 The relationship between level of managerial ownership and firm’s performance 43 Table 4.6 The determinants of managerial ownership level 45 Table 4.7 The movement actual mangerial ownership level toward to estimated optimal level 46 Table 4.8 Statistical summary of data by data source 49 Table 4.9 Large change in managerial ownership against change in firm’s attributes and market condition 52 Table 4.10 The effect of lagged managerial ownership change on firm’s performance change in terms of accounting-based measurement 53 Table 4.11 The effect of lagged change in managerial ownership on firm’s performance in terms of market-based measurement 57 vii TIEU LUAN MOI download : skknchat@gmail.com LIST OF FIGURES Figure 1.1 The relationship between insider ownership and firm’s performance Figure 1.2 The management structure of shareholding company 19 Figure 1.3 The internal governance structure of a listed company 20 Figure 1.4 The conceptual framework 21 Figure 4.1 The nonlinear relation between the lagged change in managerial ownership and the change in return on total assets (ROA) 53 Figure 4.2 The nonlinear relation between the lagged change in managerial ownership and the change in market evaluation of firm’s performance (Tobin’s Q) 55 viii TIEU LUAN MOI download : skknchat@gmail.com Table 4.11 The effect of lagged change in managerial ownership (MO) on firm’s performance in terms of market-based measurement Note: the short version of model: ∆ Tobin’s Qi,t = α + β ∆ MO i, t-1 + γ∆ X i, t-1 The market condition also includes controlling this effect: lagged change in return of specific stock and the change in market liquidity (Turnover Vn- Index) The (1) and (2) regressions with all changes are presented The column (3) and (4) decomposed the changes into groups which are positive change and negative change against unchanged group (fundamental group) The two last columns (5) and (6) focused on large change with threshold being percent Change in proxies for market condition (change in lagged return and change in Turnover Vn-Index) added on the sequence The Hausman test and robust standard error also implemented to get more efficiency and appropriate estimators Standard errors are not presented The ***, **, * mark for 1%, 5%, and 10% -level of significance VARIABLE All lag change in MO Positive change in MO Negative change in MO Large increase Large decrease ∆ln(TA)t-1 (∆ln(TA)t-1)2 ∆ 𝐾𝑇𝐴t-1 ∆SIGMAt-1 ∆YSt-1 ∆RDTAt-1 RDUMt-1 ∆CAPEXTAt-1 ∆TUt SRt-1 Constant Observations Number of id R- square (within) Hausman test (p-value) (1) RE 0.051 1.445 -0.072 -0.341 -2.493 -0.061 -1.207*** 0.025 0.220 -0.001 1,300 285 0.015 0.676 (2) RE 0.016 1.105 -0.052 -0.322 -2.149 -0.034 -1.040** 0.026 0.183 -0.400*** 0.066 0.021 1,300 285 0.113 0.510 (3) RE (4) RE -0.027 -0.052** -0.044 -0.036* 1.223 -0.062 -0.335 -2.596 -0.059 -1.230*** 0.027 0.215 0.029 1,300 285 0.022 0.341 1.188 -0.055 -0.314 -2.136 -0.029 -1.052*** 0.026 0.171 -0.401*** 0.066 0.050 1,300 285 0.118 0.322 (5) RE (6) RE -0.006 -0.033** 1.270 -0.064 -0.328 -2.552 -0.059 -1.238*** 0.026 0.210 -0.018 -0.051** 1.163 -0.054 -0.316 -2.113 -0.027 -1.054*** 0.026 0.177 -0.410*** 0.064 0.027 1,300 285 0.115 0.290 0.007 1,300 285 0.020 0.164 Source: Author’s analysis 57 TIEU LUAN MOI download : skknchat@gmail.com Generally, in column (1) and (2), the change of managerial ownership in previous period neither impacts on Tobin’s Q even after controlling lagged specific return To understand deeply about the impact of the change in managerial ownership on the change in firm’s performance, all samples are separated into positive change, no change and negative change group The regression results are presented in column (3) and (4) which the latter is controlled by market condition The negative coefficient of negative change (𝛽 equals to 0.055) implies that the decrease in managerial ownership caused the decrease in Tobin’s Q The magnitude of coefficient reduces after controlling the market condition It is explained that the reduction of managerial ownership would convey to investors about the quality of enterprise so they likely underestimate firm’s stock Regression results show that the increase in lagged managerial ownership provide insignificant impact on Tobin’s Q In addition, the negative coefficient of Turnover Vn-Index reveals that the illiquid market could lead to the worse performance in terms of market-based measurement Moreover, column (5) and (6) focus on the large change with the threshold of change being percent (instead of 2.5 percent in Fahlenbrach and Stulz’s study) The result implies that if the managerial ownership in previous period decreased at least percent (the average of large decrease group being about 10 percent), the Tobin’s Q would reduce 0.051 The elasticity of Tobin’s Q against reduction of managerial ownership is less than All of coefficients of positive change are insignificant, so an increase managerial ownership not affect the change in Tobin’s Q In terms of R&D expenditure, in columns, significantly negative coefficient of ratio R&D expenditure over total assets implies that the firm invests so much on research and development would experience the worse performance The root of lower Tobin’s Q value could be the higher rate of sort investment which creates the space of manager discretion So, outside investors will doubt about transparency and monitoring the effectiveness of these investments therefore stocks could be undervalued 58 TIEU LUAN MOI download : skknchat@gmail.com Conclusion of this chapter This chapter provides empirical evidence about the relationship between managerial ownership and firm’s performance by utilized the Probit, POLS, RE and FE model The results indicate that managerial ownership should be treated as endogenous variable Firm size and R&D expenditure information impact on optimal managerial ownership level During the operation, the actual managerial ownership level is likely dispersal the estimated optimal level The larger firm likely suffers the reduction of managerial ownership level Managers would not purchase stock when the whole market performed poorly and sell stock in the case of better market condition The change in managerial ownership provides no impact on ROA, but the managers reduced their ownership in previous period which probably induces the decrease in firm’s performance in terms market-based measurement (Tobin’s Q) 59 TIEU LUAN MOI download : skknchat@gmail.com Chapter CONCLUSIONS AND POLICY IMPLICATIONS This chapter provides main findings achieved from this empirical in comparison with its initial objectives of research Based on the empirical results, the policy recommendations for the Vietnamese’s authorities or the Government and enterprises are presented This chapter also provides limitations of this study and shed lights for further future research 5.1 Concluding remarks To address endogeneity of managerial ownership in the relation to firm’s performance, the panel data of 285 listed firms in HOSE from 2010 to 2015 is utilized to investigate the impact of the change in managerial ownership to the change in firm’s performance Key conclusions achieved from this study can be summarized as below First, firm size, the proportion of tangible asset and notified R&D expenditure information transparently would impact to the optimal managerial ownership level The Ushaped relationship between firm size and managerial ownership level was found in this study Firms intensified in tangible assets and announced R&D expenditure in a transparent way would result in the lower optimal managerial ownership level In addition, a notable conclusion that actual rate of stock owned by the board of directors does not adjust towards the optimal ownership level which is supported by the agency theory Second, managers properly sell stocks when the entire market performed well in previous years In other words, stocks are overvalued while the managers not purchase stocks in the case of a worse performing market In addition, the board of directors probably sells shares when businesses grow up due to their limited possessions and businesses can take advantage of the supervision from external partners This raises doubt about the relationship between managerial ownership and firm lifecycle In terms of risk discretion, investors tend to diversify their portfolio by reducing their investment in higher idiosyncratic risk firms Third, to overcome the endogeneity issue, this study focused on the effect of the change in managerial ownership on the change in firm’s performance Regarding the accounting based measurement of firm’s performance; the past change in managerial ownership provides insignificant effect on contemporaneous ROA And, the lagged ROA is correlated with the contemporaneous return In general, all change in managerial ownership level also provides an impact, which is statistically insignificantly on the market performance of firms However, 60 TIEU LUAN MOI download : skknchat@gmail.com when the sample is classified two groups: (i) the positive change; and (ii) the negative change, the study found the empirical evidence that the reduction of managerial ownership level causes the decrease in concurrent firm’s performance It has been argued that a decrease in proportion of the stocks owned by managers provide a signal in relation to the quality of enterprises In addition, the elasticity of Tobin’s Q against reduction of managerial ownership level is less than which implies that Tobin’s Q fluctuated more than the fraction of shares owned by managers Otherwise, the increase in managerial ownership in the previous year provides insignificant effect on Tobin’s Q This finding implies that managers purchasing more stock not help to convince the investors regarding the improvement quality of enterprises In addition, the market condition also impacts on firm’s performance 5.2 Policy implications On the ground of the empirical findings achieved from this study, a number of policy implications are drawn to businesses and governments in order to operate the business in a more efficient 5.2.1 The implications for enterprises Some policy implications for business are drawn during the process of operating business First, managers should be careful when they adjust their stock portfolio, especially reducing their stock Since the reduction of shares held by the Board of Directors and their related parties conveys a negative signal to investors in relation to the efficiency of business operations However, managers and their related parties could reduce their ownership unless the firms increase in scale or had operated stably It has been argued that, the decline should have a roadmap to avoid sudden changes Second, managerial ownership is not the only solution eliminating the agency problem As such, during the business, the board of directors should provide transparent information in relation to all their soft investment like R&D expenditure More information is provided to outside investors This action will help to mitigate the conflicts of interest between principals (shareholders) and agents (managers) In addition, enterprises should update the latest reports of the financial institutions, and follow strictly management mechanism It is generally accepted that, a regulation of corporate governance which probably helps boost the firm’s performance Enterprises can take advantage of the monitor from outside institutions such as banks or rating agency which can help firms to reduce cost in managing enterprises 61 TIEU LUAN MOI download : skknchat@gmail.com The implications for the Vietnam’s relevant authority and the Government of 5.2.2 Vietnam The financial market in Vietnam has not fully developed As such, the transparency of information in a timely manner impacts significantly on investor’s decision As such, the governments and the relevant authorities should enact the guidance which requires businesses notify transparently financial information and disclosure of the percentage of managerial ownership and insider transactions The related authorities might promulgate documents to define clearly the details of costs and revenue in the notes of financial statements instead of reporting in a perfunctory manner Since, in practice, it is impossible to assess soft investment of firms, like research and development expenditure or advertising costs 5.3 The limitations and further research 5.3.1 The limitations In this study, the measurement of managerial ownership level including the percentage of share possessed by members of the board of directors and their related parties cannot capture perfectly of the managerial power in making decision In addition, Vietnam is one of emerging and transition economies, undeveloped financial market so stock prices can be bias Therefore, the given empirical evidence should be less convincing compared to the developed market The theory of agency costs advocated the tradeoffs between incentive effect and entrenchment effect of managerial ownership So, actual proportion of share held by managers should be adjusted the optimum level Nevertheless, evidence found seems to go against this theory and has not explained convincingly 5.3.2 The further research The relationship between managerial ownership and firm’s performance should be conducted on various aspects of firm’s performance such as profitability, market value, grow, and the risk of bankruptcy The relationship between managerial ownership and firm’s performance should be carried out by other methods such as event approach By observed the appearance abnormal return rotated in short period of managers’ transaction, the evidences of the relationship 62 TIEU LUAN MOI download : skknchat@gmail.com between the change in managerial ownership and the change in firm’s performance would be more persuasive The requirement of a new theory to explain the relationship between managerial ownership and firm’s performance in the relation of firm lifecycle, as well as illumines the reason why the rate of managerial ownership dispersed to the optimal level and the determinants of adjusting portfolio costs 63 TIEU LUAN MOI download : skknchat@gmail.com REFFERENCES Abor, J (1999) The effect of capital structure on profitability: an empirical analysis of listed firm in Ghana The Journal Of Risk Fiance, 6(5), 438-445 Agrawa, A., & Knoeber, C R (1996) Firm performance and Mechanisms to Control Agency problems between Mangers and Shareholder The Journal of Financial and Quantitative Analysis, 31(3), 377-397 Al-Swidi, A K., Al-Matari , E M., & Fadzil , F H (2014) The measurements of firm performance’s dimensions Asian Journal of Finance & Accounting, 6(1), 24-49 Amato, L H., & Burson, T E (2007) The effects of firm size on profit rates in the financial services Journal of Economics and Economic Education Research, 8(1), 67-81 Banchuenvijit , W., & Nguyen, T H P (2012) Determinants of Firm Performance of Vietnam Listed Companies Academic and Business Research Instıtute Bebchuk, L A., Cremers, M K., & Peyer, U C (2011) The CEO pay slice Journal of Financial Economics, 102(21), 199-221 Benson, B W., & Davidson, W N (2009) Reexaming the managerial ownership effect on firm value Journal of Finance Corporate, 15(5), 573-586 Beyer, M., Czarnitzki, D., & Kraft, K (2012) Managerial ownership, entrenchment and innovation Journal Economics of Innovation and New Technology, 21(7), 679-699 Bloom , M., & Milkovich, G T (1998) Relationships among Risk, Incentive Pay, and Organizational Performance The Academy of Management Journal, 41(3), 283-297 Bozec, R., Dia, M., & Bozec, Y (2010) Governance – performance relationship: A British Journal of Management, 21(3), 684–700 Brick, I., Palia, D., & Wang, C J (2005) Simultaneous estimation of CEO compensation, leverage, and board characteristics on firm value Working paper of Rutgers Business School Brush, T H., Bromiley, P., & Hendrickx, M (2000) The free cash flow hypothesis for sales growth and firm performance Strategic Management Journal, 21(4), 455-472 Cheung, A., & Wei, J (2006) Insider ownership and corporate performance: Evidence from the adjustment cost approach Journal Corporate Finance, 12(5), 906-925 Cho, M H (1998) Ownership Structure, Investment, and the Corporate Value: An Empirical Analysis Journal of Financial Economics, 47(1), 103-121 64 TIEU LUAN MOI download : skknchat@gmail.com Coles, J L., Daniel, N D., & Lalitha, N (2006) Managerial incentives and risk-taking Journal of Financial Economics, 79(2), 431-468 Coles, J L., Lemmon, M L., & Meschke, F J (2012) Structural models and endogeneity in corporate finance: the link between managerial ownership and corporate performance Journal Financial of Economics, 103(1), 149-168 Cosh, A., Fu, X., & Hughes, A (2007) Management characteristics, managerial ownership and innovative efficiency in high-technology industry Working Paper Series No 007 Cui, H., & Mak, Y (2002) The relationship between managerial ownership and firm performance in high R&D firms Journal of Corporate Finance, 8(2), 313-336 Demirbag, M., & Zaim, S (2006) An analysis of the relationship between TQM implementation and organizational performance: evidence from Turkish SMEs Journal of Manufacturing Technology Management, 17(6), 829-847 Demsetz, H., & Lehn, K (1985) The Structure of Corporate Ownership: Causes and Consequences Journal of Political Economy, 93(6), 1155–1177 Dimitrios, M., & Psillaki, M (2010) Capital structure, equity ownership and firm performance Journal of Banking and Finance, 34(3), 621-632 Do, X Q., & Wu, X Z (2014) The impact of ownership structure and capital structure on financial performance of Vietnamese firms International Business Reasearch, 64-71 Do, X Q., & Wu, X Z (2015) Measuring impact of ownership structure and corporate governance on capital structure of vietnamese SOES European Journal of Business and Social Sciences, 4(8), 218-230 Drakos, A A., & Bekiris, F V (2010) Corporate performance, managerial ownership and endogeneity: A simultaneous equation analysis for the Athen stock exchange Research in International Business and Finance, 24(1), 24-38 Drakos , A A., & Karathanassis, G A (2004) A note on Equity Ownership and Corporate Value in Greece Managerial and Decision Economics, 25, 537-547 Ehikioya, B (2009) Corporate governance structure and firm performance in developing economies: evidence from Nigeria Q Emerald Group Publishing, 9(3), 231-243 Faccio, M., & Lasfer, M (1999) Managerial ownership, board structure and firm value: the UK evidence Cass Business School Research paper Fahlenbrach, R., & Stulz, R M (2009) Managerial ownership dynamics and firm value Journal of Financial Economics, 92(3), 342-361 65 TIEU LUAN MOI download : skknchat@gmail.com Fama, E F (1980) Agency problems and the theory of the firm Journal of Political Economy, 88(2), 288-307 Fama, E F., & French, K R (1995) Size and book-to-market factors in earnings and returns Journal of Finance, 50(1), 131-155 Finkelstein, S., & Boyd, B K (1998) How Much DoeThe CEO matter? The Role of Managerial Discretion in the Setting of CEO Compensation The Academy of Management Journal, 41(2), 179-199 Firdaus, N., & Kusumastuti, R (2013) How Ownership Structure Influences Firm Performance in Relation to Its Life Cycle International Research Journal of Business Study, 5(3), 23-36 Gertler, M., & Hubbard, G R (1988) Financial factors in business fuctuations Financial Market Volatility: Causes and Consequences Working paper.Gleasona, K C., Mathur, L K., & Mathur, I (2000) The interrelationship between culture, capital structure, and performance: evidence from European retailers” Journal of Business Research, 50, 185-191 Hambrick, D C., & Finkelstein, S (1987) Managerial Discretion: A Bridge Between Polar Views of Organizations Research in Organizational Behavior, 9, 369-406 Himmelberg, C P., Hubbard, G R., & Palia, D (1999) Understanding the determinants of managerial ownership and the link between ownership and Journal of Financial Economics, 53(3), 353-384 Hirshleifer, D., & Thakor, A V (1994) Managerial performance, board of directors and takeover bidding Journal of Corporate Finance, 1(1), 63-90 Hoang, L., Nguyen, C., & Hu, B (2016) Ownership Structure and Firm Performance: Evidence from Vietnamese Listed Firms Working Papers Holderness, C G., Kroszner, R S., & Sheehan, D P (1999) Were the good old days that good? Changes in managerial stock ownership since The Great Depression Journal of Finance, 1(2), 435-469 Holderness, C G (2003) A Survey of Blockholders and Corporate Control Economic Policy Review, 9, 51-63 Hu, Y., & Zhou, X (2008) The performance effect of managerial ownership: evidence from China Journal of Banking & Finance, 32(10), 2099-2110 66 TIEU LUAN MOI download : skknchat@gmail.com Ibrahim, Q., Rehman, R., & Raoof, A (2010) Role of corporate governance in firm performance: A Comparative study between Chemical and Pharmaceutical Sectors of Pakistan International Research Journal of Finance and Economics, 7–16 Iturralde , T D., Maseda , A D., & Arosa, B D (2011) Insiders Ownership and Firm Performance Empirical Evidence International Research Journal of Finance and Economic, 67, 118- 129 Javed, Z H., Rao, H H., Akram, B., & Nazir , M F (2015) Effect of Financial Leverage on Performance of the Firms: Empirical Evidence from Pakistan SPOUDAI Journal of Economics and Business, 65(1-2), 87-95 Jensen, M C (1986) Agency costs of free cash flow, corporate finance, and takeovers The American Economic Review, 76(2), 323-329 Jenter, D (2005) Market Timing and Managerial Portfolio Decisions Journal of Finance, 60(4) Jiraporn, P., & Liu, Y (2008) Capital Structure, Staggered Boards, and Firm Value Financial Analysts Journal, 64(1), 49-60 Kapopoulos, P., & Lazaretou, S (2009) Corporate ownership structure and firm performance: evidence from Greek firms Corporate Governance, 15(2), 144–159 King., M R., & Santor, E (2008) Family values: Ownership structure, performance and capital structure of Canadian firms Journal of Banking & Finance, 32(11), 2423- 2432 Kole, S R (1997) The complexity of compensation contracts Journal of Financial Economics, 43(1), 79–104 Koufopoulos, D., Zoumbos, V., Argyropoulou, M., & Motwani, J (2008) Top management team and corporate performance: a study of Greek firms Team Performance Management: An International Journal, 14(7), 340–363 Kristy, J E., & Diamond, S Z (1983) Finance without Fear New York Kuhnen, C M., & Zwiebel, J (2006) Executive Pay, Hidden Compensation, and Managerial Entrenchment Working paper Lambrecht, B M., & Myer, S C (2007) A Theory of Takeovers and Disinvestment The Journal of Finance, 62(2), 809–845 Le, M T., & Walker, G (2008) Corporate Governance of Listed Companies in Vietnam Bond Law Review, 20(2) Lebas, M (1995) Performance measurement and performance management International Journal of Production Economics, 41(1-3), 23–35 67 TIEU LUAN MOI download : skknchat@gmail.com Leland, H E., & Pyle, D H (1977) Informational Asymmetries, Financial Structure, and Financial Intermediation The Journal of Finance, 32(2) McConnell, J J., & Servaes, H (1990) Additional evidence on equity ownership and corporate value Journal of Financial Economics, 27(2), 595-612 McConnell, J J., Servaes, H., & Lins, K V (2008) Changes in insider ownership and changes in the market value of firm Journal of Corporate Finance, 14(2), 92-106 Mehran, H (1995) Executive compensation structure ownership and firm performance Journal of Financial Economics, 38(2), 163–184 Morck, R., Shleifer, A., & Vishny, R W (1988) Management ownership and market valuation: An empirical analysis Journal of Financial Economics, 20, 293-315 Morck, R., Shleifer, A., & Vishny, R W (1998) Managerial Ownership and Firm performance: An empirical Analysis Journal Financial Economics, 20, 293-315 Neely, A., Gregory , M., & Platts , K (1995) Performance measurement system design: A literature review and research agenda International Journal of Operations & Production Management, 25(12), 1128–1263 Nguyen, T H., & Giang, T M T (2015) Triangle relationship among ownership structure, dividend policy and firm performance: An empirical study in Vietnamese companies Asian Social Science, 11(27), 195-207 Nguyen, S K., & Vo, H D (2015) Strategic Risks, Family Ownership, and Performance from Vietnam's listed firms The ninth Vietnam Economists Annual Meeting Da Nang Niresh, A J., & Velnampy, T (2014) Firm size and profitability: A study of listed manufacturing firms in Sri Lanka International Journal of Business and Management, 9(4), 57-64 Niresh, A., & Velnampy, T (2014) Firm size and profitability: A study of listed manufacturing firms in Sri Lanka International Journal of Business and Management, 9(4) Palia, D (2001) The Endogeneity of Managerial Compensation in Firm Valuation: A Solution Review of Financial Studies, 14(3), 735-764 Roberts, M R., & Whited , T M (2013) Endogeneity in Empirical Corporate Finance Handbook of the Economics of Finance, 2, 493-572 68 TIEU LUAN MOI download : skknchat@gmail.com Ruan, W., Tian, G., & Ma, S (2011) Managerial ownership, capital structure and firm value: Evidence from China’s Civilian run firms ustralasian Accounting, 5(3), 73-92 Safieddine, A., & Titman, S (1999) Leverage and Corporate Performance: Evidence from Unsuccessful Takeovers The Journal of Finance, 54(2), 547–580 Sharma, B (2002) An inter‐industry comparison of quality management practices and performance Managing Service Quality: An International Journal, 12(6), 394-404 Short, H., & Keasey, K (1999) Managerial ownership and the performance of firms: evidence from the UK Journal of Corporate Finance, 5, 79–101 Stulz, R M (1988) Managerial control of voting rights: Financing policies and the market for corporate control Journal of Financial Economics, 20, 25-54 Stulz, R M (1990) Managerial discretion and optimal financing policies Journal of Financial Economics, 26(1), 3-27 Tobin, J (1969) A general equilibrium approach to monetary theory Journal of Money, Credit and Banking, 1(1), 15-29 Tsao, C.-W., Chen, S.-J., Lin, C.-S., & Hye, W (2009) Founding-Family Ownership and Firm Performance: the role of high-performance work systems Family Business Review, 8, 1-36 Velnampy, T (2005) A Study on Investment Appraisal and Profitability Journal of Business Studies, 2, 23-35 Vo, H D., & Nguyen, M T (2014) The Impact of Corporate Governance on Firm Performance: Empirical Study in Vietnam International Journal of Economics and Finance, 6(6), 2-13 Wiwattanakantang, Y (2013) An empirical study on the determinants of the capital structure of Thai firms Pacific-Basin Finance Journal, 7(3-4), 371–403 Zeitun , R., & Tian, G G (2007) Does ownership affect a firm's performance and default risk in Jordan? Corporate Governance: The international journal of business in society, 7(1), 66-82 Zhou, X (2001) Understanding the determination of managerial ownership and its relationship to firm performance: comment Journal of Financial Economics, 62, 559– 571 Zwiebel, J (1995) Corporate conservatism and relative compensation Journal of Political Economy, 103(1), 1-25 Zwiebel, J (1996) Dynamic capital structure under managerial entrenchment AmericanEconomic Review, 86, 1197-1215 69 TIEU LUAN MOI download : skknchat@gmail.com APPENDICES APPENDIX A: THE CLASSIFICATION OF FIRM BY INDUSTRY Industry Real estate Number of firms 41 Rubber Information technology Oil and gas 10 Tourism Building and materials Education Mining and quarrying of mineral Energy and electricity 12 Plastic packing Manufacturing business 21 Steel Food and nurture 14 Commerce 13 Sea-food 16 Transportation and warehousing 22 Building and materials 13 Construction 22 Other industry 43 All sample 285 Companies ASM, BCI, CLG, D2D, DIG, DLG, DRH, DTA, HAG, HDC, HQC, IDI, IJC, ITA, ITC, KAC, KBC, KDH, LCG, LGL, LHG, NBB, NTL, NVN, NVT, OGC, PDR, PPI, QCG, REE, SC5, SJS, SZL, TDH, TIX, UDC, UIC, VIC, VNI, VPH, VRC BRC, CSM, DPR, DRC, HRC, PHR, SRC, TNC, TRC CMG, CMT, ELC, FPT, ITD, SAM, SGT, ST8, SVT ASP, DPM, PET, PTL, PVD, PVT, PXI, PXL, PXS, PXT DSN, HOT, PAN, VNG APC, DCL, DHG, DMC, HAI, IMP, JVC, OPC, VFG, VMD PNC BGM, BMC, KSA, KSB, KSH, KSS, KTB, LBM, LCM BTP, CNG, DRL, GAS, KHP, PGC, PGD, PPC, SEC, SJD, TBC, TMP, VSH BMP, DAG, DTT, MCP, RDP, TPC, TTP, VPK DHC, DQC, EVE, GDT, GMC, GTA, HAP, KMR, LI, NSC, PAC, SAV, SHI, SSC, TCM, TLG, TTF, VID, VTB DTL, HLA, HMC, HSG, POM, SMC, TLH, VIS BBC, BHS, CLC, KDC, LAF, LSS, MSN, NHS, SBT, SCD, TAC, VCF, VLF, VNM BTT, CCI, CMV, DXG, GIL, HDC, HLG, KHA, PIT, SMA, SVC, TNA, VHG, AAM, ABT, ACL, AGF, ANV, ATA, AVF, CM, FMC, HVG, ICF, TS4, VHC, VNH, VTF DVP, GMD, GSP, GTT, HTV, MHL, PDN, PJT, PVT, SBC, SFI, STT, TCL, TCO, TMS, VIP, VNA, VNL, VNS, VOS, VST, VTO ACC, BT6, CTI, CYC, DCT, DHA, DFC, DXV, HTI, HVX, NAV, NNC, TCR BCE, C47, CDC, CTI, CTD, FLC, HBC, HTI, HU1, HU3, L10, LM8, MCG, MDG, NKG,PTC, PXL, PXS, PXT, TDC, THG, TV1, VNE AGM, C21, C32, CAV, CIG, CLL, CLW, COM, DHM, DXG, EMC, FCM, FCN, FDC, FLC, GTN, HAR, HAS, HAX, HHS, HDG, HTL, LGC, MWG, NHW, NLG, PNJ, PTB, PTK, QBS, RIC, SBA, SFC, SHP, SII, SKG, SPM, SRF, STG, TDW, TIC, TIE, TMT, TNT, TRA, TSC, TYA, VPH, VRC, VSC, VSI Source: Author’s summary 70 TIEU LUAN MOI download : skknchat@gmail.com APPENDIX B: TEST FOR ENDOGENEITY OF MANAGERIAL OWNERSHIP AND FIRM’S PERFORMANCE Test P-value Underidentification test 0.034 Sargan statistic (overidentification test of all instruments) 0.070 Endogeneity test of endogenous regressors 0.773 Source: Author’s analysis APPENDIX C: THE RESULT OF REGRESSION ESTIMATED OPTIMAL MANAGERIAL OWNERSHIP The column (1) for represents estimation using the year-fixed effect, and column (2) represents for estimation using industry-fixed effect Standard errors are in parentheses, and (***), (**), and (*) indicate significance at 1%, 5% and 10% respectively VARIABLE Ln(S) Ln(S)2 KS (KS)2 SIGMA YS RDTA RDUM CAPEXK Constant Observations Number of id R-squared (1) (2) -0.267 (0.217) 0.004 (0.004) 0.119* (0.065) -0.002* (0.001) -19.440*** (4.548) 0.078** (0.040) -0.005** (0.003) 0.060 (0.044) -0.004 (0.005) -1.298 (3.305) 1,414 277 0.053 -0.237 (0.216) 0.004 (0.004) 0.035 (0.074) -0.001 (0.001) -18.110*** (4.408) 0.046 (0.039) -0.005** (0.002) -0.0191 (0.0432) -0.002 (0.005) -2.415 (3.315) 1,414 277 0.042 Source: Author’s analysis 71 TIEU LUAN MOI download : skknchat@gmail.com ... about the relationship between managerial ownership and firm’s performance Additionally, Fahlenbrach and Stulz (2008) investigated the relationship between the change in managerial ownership and the. .. two folds: (i) estimating the optimal level for managerial ownership; and (ii) examining and quantifying the relationship between managerial ownership and firm’s performance In addition, this study... decisions on purchasing and selling stocks? (iv) Is there any relationship between the change in managerial ownership and the change in firm’s performance in both aspects accounting-based and market based