Ownership structure, board characteristics and firm performance in vietnam ( luận án (theses))

VIETNAM NATIONAL UNIVERSITY OF HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY NGUYỄN TIẾN THÔNG OWNERSHIP STRUCTURE, BOARD CHARACTERISTICS AND FIRM PERFORMANCE IN VIETNAM PHD THESIS HO CHI MINH CITY, 2019 VIETNAM NATIONAL UNIVERSITY OF HO CHI MINH CITY UNIVERSITY OF TECHNOLOGY NGUYỄN TIẾN THÔNG OWNERSHIP STRUCTURE, BOARD CHARACTERISTICS AND FIRM PERFORMANCE IN VIETNAM Subject: Business Administration Code: 62340501 Independent Examiner 1: Associate Prof.Dr Vương Đức Hoàng Quân Independent Examiner 2: Associate Prof.Dr Đỗ Bá Khang Examiner 1: Associate Prof.Dr Võ Thị Quý Examiner 2: Associate Prof.Dr Nguyễn Minh Hà Examiner 3: Associate Prof.Dr Nguyễn Minh Kiều ADVISORS Dr Nguyễn Thu Hiền Associate Prof.Dr Piman Limpaphayom STATUTORY DECLARATION I declare that I have developed and written the enclosed Dissertation completely by myself, and have not used sources or means without declaration in the text Any thoughts from others or literal quotations are clearly marked The Dissertation was not used in the same or in a similar version to achieve an academic grading or is being published elsewhere Author, Signature Nguyễn Tiến Thông i ABSTRACT Ownership structure, which specifies who are the owners of the firm, is crucial to corporate governance as it explains sources of agency conflicts Roles and impacts of different corporate owners on corporate performance and governance have been studied worldwide, but not as popular for the role of State-Owned Holding Company (SOH) as a model of state capital investment agency This study examines the relationship of ownership of SOH in the listed companies with state capital in Vietnam and the performance of these firms The result shows that companies with SOH ownership, or SOH-linked companies (SLCs), deliver superior returns and enjoy higher valuations than GLCs and non-GLCs as a result of higher profitability, and lower leverage ratio The evidence shows that when SOH holds a dominant ownership, it exercises positive control on firms, which results in better market performance Further analysis shows that SLCs hold more cash and the shareholders appreciate the cash hold by the SLCs, robust to the firms’ characteristics Without evidence that SLCs have special privileges and lower business risks, the better shareholder value of cash in SLCs is revealed to come from better corporate governance This study contributes to the literature of ownership structure and corporate governance and provides an evidence for SOH as a positive ownership and monitoring mechanism in improving corporate governance and firm performance in companies with State-owned capital in Vietnam The study also looks at the impacts of other owners in listed companies, such as family owners and foreign owners, board characteristics, and board independence on firm performance and yields evidence for various impacts of internal governance mechanisms on firm performance ii ACKNOWLEDMENTS This thesis is a dedicated present to my dear parents to thank for their invisible contributions and also the wishes they have expected on me The Buddha said “in the end, only three things matter: how much you loved, how gentle you lived, and how gratefully you let go things not meant for you” I would like to thank my parents for their love, their mercy and their sacrifices helped me grow up I am grateful to my advisors, Dr Nguyen Thu Hien and Assoc Prof.Dr Piman Limpaphayom for their thoughtful guidance and insightful comments throughout my working Corporate Governance is a new research direction and their knowledge and experience are useful resources for my first step in this field I would like to say thank to other teachers of University of Technology, The School of Industrial Management, my colleagues and my friends with their supports and encouragement during my efforts for this study Last but not least, I would like to express my sincere thanks to Prof.Dr.Nguyễn Trọng Hoài Associate Prof.Dr.Võ Thị Quý Associate Prof.Dr.Nguyễn Minh Hà Associate Prof.Dr Nguyễn Minh Kiều Associate Prof.Dr Vương Đức Hoàng Quân Associate Prof.Dr Đỗ Bá Khang Dr.Dương Như Hùng for their precious comments to help improve my work iii TABLE OF CONTENTS LIST OF FIGURES vii LIST OF TABLES viii ABBREVIATIONS x CHAPTER INTRODUCTION 11 1.1 Overview 11 1.2 Research Gap 16 1.3 Research Objectives 17 1.4 Research Scopes 18 1.5 Research Methodology 18 1.6 Research Significance 20 1.7 Research Structure 20 CHAPTER STATE-OWNED HOLDING COMPANY 22 2.1 SOE and SOH 22 2.2 State-Owned Enterprises 23 2.2.1 Concept of SOE 23 2.2.2 SOE in Literature 24 2.2.3 SOEs & Privatizations in other countries 28 2.2.4 SOEs and Equitization in Vietnam 29 2.3 State-Owned Holding Company, a new approach 30 2.3.1 SOH: Managerial Form 31 2.3.2 SOH: A Framework 32 2.3.3 SOH: Around the world 34 2.4 Temasek Holdings, a successful SOH 36 2.5 Khazanah Nasional Berhad, SOH of Malaysia 36 2.6 SCIC, SOH of Vietnam 37 2.7 Conclusion 40 CHAPTER 3.1 LITERATURE REVIEW 41 Literature Review 41 3.1.1 Agency Theory and Agency Problem 41 3.1.2 State Ownership Agency Problem 43 3.1.3 Remedies to Agency Problem 43 3.1.4 Model of SOH blockholder with profitability objective as remedy to State ownership agency problem 44 3.1.5 Other Ownership Structure & Board Characteristics as Remedies to Agency Problem 45 3.1.6 Ownership Structure, Cash Holdings and Firm Value 50 iv 3.1.7 Firm Performance 52 3.2 Previous Studies on Ownership Structure, Board Characteristics and Firm Performance 53 3.2.1 Ownership Structure and Board Characteristics Studies around the World 54 3.2.2 3.3 Ownership Structure and Board Characteristics Studies in Literature 55 Research Hypothesis Development 59 3.3.1 Impacts of SOH ownership on Firm Performance 59 3.3.2 Role of Ownership Structure on Firm Performance through impacts of Cash Holdings 64 3.4 Conclusion 65 CHAPTER METHODOLOGY 66 4.1 Data 66 4.2 Research Model 67 4.2.1 Research Model 70 4.2.2 Research Variables for Impacts of Ownership Structure and Board Characteristics on Firm Performance 77 4.2.3 Research Variables for Impacts of Ownership Structure on Firm Performance through Cash Holdings 83 4.3 Methodology 86 4.3.1 Pooled Cross Section (POLS) 86 4.3.2 Fixed Effects (FE) 86 4.3.3 Heteroscedasticity Tests 87 4.3.4 Autocorrelation Tests 87 4.3.5 Random Effects (RE) 87 4.3.6 Feasible Generalized Least Square (FGLS) 87 4.3.7 Panel-Corrected Standard Error (PCSE) 88 4.3.8 Breusch-Pagan Lagrange Multiplier (LM) Test and Hausman Test 88 4.3.9 Endogeneity of Ownership Structure 88 4.4 Conclusion 90 CHAPTER RESULTS 91 5.1 Description of dataset 91 5.2 Outliers 94 5.3 Correlation Analysis of Variables 95 5.4 Performance Comparisons between SLCs, GLCs and non-SLCs 95 5.5 Regression Results 100 v 5.5.1 Impacts of Ownership Structure, Board Characteristics on Firm Performance 100 5.5.2 Impacts of Ownership Structure on Firm Performance through Interaction Variables 106 5.5.3 Discussions on SLCs’ Performance 111 5.5.4 Impacts of Ownership Structure on Corporate Cash Holdings 113 5.5.5 Impacts of Ownership Structure, Cash Holdings on Firm Value 116 5.6 Robustness Check 121 5.7 Endogeneity Check 123 5.8 Summary of Chapter 125 CHAPTER DISCUSSIONS 128 6.1 Introduction 128 6.2 Summary of Main Findings from Samples 128 CHAPTER IMPLICATIONS 135 7.1 Implications for Literature based on findings from study’s samples 135 7.2 Implications for Policy Makers based on findings from study’s samples 138 7.3 Conclusions 140 7.4 Limitations and future research 141 LIST OF PUBLICATIONS 143 REFERENCES 144 Annex SLCs and GLCs Benchmarking on Performance Ratios, Privileges and Business Risk 171 Annex Value of Cash Holidings Regressions 175 Appendix 177 vi LIST OF FIGURES Figure 3.1 Agency conflicts and corporate governance Author compiled 44 Figure 3.3 Vietnamese Companies by Categories Statistics Office (31/08/2017) 49 Figure 4.1 Research Model Author 71 Figure 4.2 Direct Relationship Model with Variables Author 72 vii LIST OF TABLES Table 2.1 Differences in Governance Between Private and SOEs Sectors 25 Table 2.2 Summary of SOEs related topics on Financial Times Top 45 Journals 26 Table 2.3 SOH in two-tiered principal–agent relationship 33 Table 2.4 Type of features of SOHs 33 Table 2.5 SOHs in Countries 35 Table 2.6 Comparison between Temasek Holdings and SCIC 37 Table 2.7 Comparison between SCIC and State capital companies and GLCs 38 Table 2.8 SCIC Main Functions 38 Table 2.9 SCIC as a Shadow Investor 39 Table 3.1 Summary of Key Studies on the Relationship between Ownership Structure and Firm Performance 56 Table 3.2 Previous Studies of Ownership Structure, Board Characteristics in Vietnamese Market 58 Table 4.1 Performance Measurements for Comparisons Analysis 68 Table 4.2 Hypotheses for IGMs on Firm Performance 73 Table 4.3 Hypotheses for Impacts on Cash Holdings 74 Table 4.4 Hypotheses for Impacts on Shareholders’ Value of Cash Holdings 76 Table 4.5 Independent Variables for Impacts of Ownership Structure and Board Characteristics on Firm Performance 77 Table 4.6 Performance Measurements for Impacts of Ownership Structure and Board Characteristics 80 Table 4.7 Control Variables for Impacts of Ownership Structure and Board Characteristics on Firm Performance 81 Table 4.8 ICB Industry 82 Table 4.9 Variables and Definitions for Cash Holdings Model 83 Table 4.10 Variables and Definitions for Level of Excess Cash Model 84 Table 4.11 Variables and Definitions for Change of Excess Cash Model 85 Table 5.1 Descriptive Statistics 92 Table 5.2 Descriptive Statistics by Industries 94 Table 5.3 Independent Variables Correlation Matrix 95 Table 5.8 Tests for Heteroscedasticity of Model 1A 101 Table 5.9 Test for Autocorrelation for Model 1A 101 Table 5.10 Impacts of Ownership Structure and Board Characteristics on Firm Performance 102 Table 5.11 Tests for Heteroscedasticity for Model 2A 107 Table 5.12 Impacts of Ownership Structure on Firm Performance through Interaction Variables 108 Table 5.13 Tests for Heteroscedasticity for Model 3A 113 Table 5.14 Impacts of Ownership Structure on Cash Holdings 114 Table 5.16 Impacts of Ownership Structure on Value of Cash using Excess Return Regressions (Annex 2) 119 Table 5.12 Robustness Check by Sub-periods Regressions of Ownership Structure and Board Characteristics 122 Table 5.13 Robustness Check by Industry-Adjusted-Performance Regressions of Ownership Structure and Board Characteristics 123 viii Annex Value of Cash Holidings Regressions Table 5.15 Impacts of Ownership Structure on Value of Cash using Market Value Regressions The dependent variable for the regressions is the market value of the firm in year t, MV t For each independent variable X (E, D, I, NA, MV), Xt is the level from year t-1 to t, divided by the level of net assets in year t; dXt is the change in the level of X from year t−2 to year t, divided by net assets in year t ((Xt – Xt−2)/NAt ); dXt+2 is the change in the level of X from year t+2 to year t, divided by net assets in year t ((X t+2 – X t)/NAt) NA is Net Assets E = operating profit, earnings before interest and tax D = dividends payouts I = Interest Expense Excess Cash is Cash at time t minus optimal cash from model 3A SCIC ownership, government ownership, family ownership and foreign ownership, year and Industry are same as previous definitions Sample without financial companies include 220 non-financial firms FGLS 2009-2017 Market Value to Net Asset VARIABLES Excess Cash SCIC Ownership Excess Cash x SCIC Ownership Government Ownership SCIC Ownership 0.0353*** (0.00621) 0.359** Government Ownership 0.0248** (0.0106) dEj,t+2/NAj,t Dj,t/NAj,t dDj,t/NAj,t dDj,t+2/NAj,t Ij,t/NAj,t dIj,t/NAj,t dIj,t+2/NAj,t dNAj,t/NAj,t dNAj,t+2/NAj,t dMVj,t+2/NAj,t Year Industry Constant Observations Number of id -0.00754 (0.0115) 0.165 SCIC Ownership 0.0292*** (0.00905) 0.746*** (0.126) 0.109 (0.126) (0.289) 0.596* (0.351) Government Ownership 0.0412** (0.0162) Family Ownership 0.0298*** (0.0101) Foreign Ownership 0.0193* (0.0106) All 0.00839 (0.0183) 0.476* (0.267) 0.530* (0.320) -0.0581* -0.153** -0.0783 (0.0347) 0.0202 (0.0256) (0.0349) 0.0331 (0.0250) (0.0710) -0.0176 (0.0391) (0.0722) 0.0308 (0.0405) -0.299*** 0.358*** (0.0739) 0.00912 (0.0393) -0.541*** -0.560*** (0.118) 0.0142 (0.0480) (0.121) 0.0408 (0.0569) 0.846*** 0.950*** 0.909*** 0.897*** 0.781*** (0.0859) 0.195*** (0.0844) 0.222*** (0.197) (0.198) 0.136 (0.187) 0.0850 (0.0618) (0.0642) (0.146) (0.134) 0.0545 (0.263) 0.646*** (0.250) -0.337* (0.184) -0.408 (0.584) 2.294*** (0.638) 0.440 (0.424) -0.185 (0.743) -1.022 (0.657) -0.246 (0.651) -0.0491 (0.0356) 0.0585** (0.0259) -0.0488 (0.0401) Yes Yes 0.246*** (0.0318) 735 220 0.0476 (0.263) 0.626** (0.251) -0.348* (0.184) -0.450 (0.574) 2.417*** (0.617) 0.533 (0.409) -0.232 (0.761) -0.658 (0.621) 0.194 (0.627) -0.0375 (0.0349) 0.0439* (0.0243) -0.0453 (0.0384) Yes Yes 0.281*** (0.0324) 735 220 0.0545 (0.263) 0.646*** (0.250) -0.337* (0.184) -0.408 (0.584) 2.294*** (0.638) 0.440 (0.424) -0.185 (0.743) -1.022 (0.657) -0.246 (0.651) -0.0491 (0.0356) 0.0585** (0.0259) -0.0488 (0.0401) Yes Yes 0.190*** (0.0587) 735 220 0.0476 (0.263) 0.626** (0.251) -0.348* (0.184) -0.450 (0.574) 2.417*** (0.617) 0.533 (0.409) -0.232 (0.761) -0.658 (0.621) 0.194 (0.627) -0.0375 (0.0349) 0.0439* (0.0243) -0.0453 (0.0384) Yes Yes 0.233*** (0.0631) 735 220 (0.0758) 0.00316 (0.0377) 0.0417 (0.286) 0.621** (0.269) -0.359* (0.198) -0.553 (0.633) 2.801*** (0.684) 0.476 (0.453) -0.227 (0.826) -0.802 (0.654) 0.269 (0.678) 0.00198 (0.0379) 0.0367 (0.0255) -0.0264 (0.0417) Yes Yes 0.243*** (0.0296) 735 220 All -0.109*** Excess Cash x Family Ownership Foreign Ownership dEj,t/NAj,t Foreign Ownership 9.11e-06 (0.00614) (0.152) 0.371* (0.197) Excess Cash x Government Ownership Family Ownership Excess Cash x Foreign Ownership Ej,t/NAj,t Family Ownership 0.0298*** (0.00687) PCSE 2009-2017 Market Value to Net Asset 0.0174 (0.286) 0.664** (0.271) -0.393* (0.203) -0.408 (0.651) 2.821*** (0.711) 0.604 (0.476) 0.130 (0.821) -1.433** (0.695) -0.203 (0.700) -0.0132 (0.0378) 0.0402 (0.0275) -0.0248 (0.0435) Yes Yes 0.303*** (0.0330) 735 220 0.0402 (0.264) 0.656*** (0.250) -0.359* (0.185) -0.339 (0.584) 2.355*** (0.634) 0.524 (0.423) -0.0122 (0.760) -1.103* (0.641) -0.232 (0.649) -0.0397 (0.0358) 0.0549** (0.0254) -0.0457 (0.0396) Yes Yes 0.294*** (0.0316) 735 220 0.0417 (0.286) 0.621** (0.269) -0.359* (0.198) -0.553 (0.633) 2.801*** (0.684) 0.476 (0.453) -0.227 (0.826) -0.802 (0.654) 0.269 (0.678) 0.00198 (0.0379) 0.0367 (0.0255) -0.0264 (0.0417) Yes Yes 0.188*** (0.0579) 735 220 0.0174 (0.286) 0.664** (0.271) -0.393* (0.203) -0.408 (0.651) 2.821*** (0.711) 0.604 (0.476) 0.130 (0.821) -1.433** (0.695) -0.203 (0.700) -0.0132 (0.0378) 0.0402 (0.0275) -0.0248 (0.0435) Yes Yes 0.253*** (0.0621) 735 220 0.0402 (0.264) 0.656*** (0.250) -0.359* (0.185) -0.339 (0.584) 2.355*** (0.634) 0.524 (0.423) -0.0122 (0.760) -1.103* (0.641) -0.232 (0.649) -0.0397 (0.0358) 0.0549** (0.0254) -0.0457 (0.0396) Yes Yes 0.205*** (0.0579) 735 220 Standard errors in parentheses Asterisks (***, **, and *) denote statistical significance at the 1%, 5%, and 10% levels, respectively 175 Table 5.16 Impacts of Ownership Structure on Value of Cash using Excess Return Regressions The dependent variable for the regressions is excess return the firm in year t relative to the Fama and French (1993) 25 size and book-to-market portfolios X indicates a change in X from year t – to t Independent variables are normalized by the market value of equity (ME) of the firm at the beginning of the year Lagged Cash (Cj,t-1) = Cash at time t-1 Earnings (Ejt) = Earning before Interest and Tax from year t – to t Net Assets (NAjt) is Net Asset at time t Interest (Ijt) = Interest Expense from year t – to t Dividend (Djt)= Dividend Payout from year t – to t Leverage (Ljt) = Debtjt/(Debjt+Mjt) = leverage at time t Detbjt = Short term debt jt + Long term debt jt New Finance (NFjt) = New Finance from year t – to t = Net New Equity Issues + Net New Debt Issues Ownershipjt = Ownership Type including SCIC ownership, Government Ownership, Family ownership and Foreign ownership Year and Industry are same as previous definitions Sample without financial companies include 220 non-financial firms VARIABLES Cash/ME SCIC Ownership x Cash/ME SCIC Ownership SCIC Ownership 0.392** (0.172) 0.671 FGLS 2009-2017 Excess Return Government Family Foreign Ownership Ownership Ownership 0.501*** 0.396** 0.178 (0.172) (0.165) (0.187) (0.748) 0.0602 (0.0906) Government Ownership x Cash/ME Government Ownership -0.0979 (0.177) 0.0272 (0.186) 0.0163 (0.0244) (0.568) -0.105* (0.0554) Foreign Ownership x Cash/ME Dividend/ME Lagged Cash/ME Leverage New Finance/ME Lagged Cash/ME x Cash/ME Leverage x Cash/ME Industry Year Constant Observations Number of id (0.828) -0.00668 (0.106) 2.647*** (0.564) -0.0944* (0.0523) 2.893*** (0.663) -0.0803 (0.0609) 0.486*** All 0.283 (0.284) 1.485* (0.819) 0.00970 (0.111) 0.381 (0.236) 0.00888 0.0331 (0.0477) (0.0511) 1.067 1.215 (0.769) -0.0836 (0.0856) 2.592*** (0.810) -0.0835 (0.0866) 2.541*** (0.831) -0.0933 (0.0867) 0.411*** 0.464*** 0.602*** 0.493*** (0.635) -0.0603 (0.0631) 0.475*** 0.406*** 0.413*** 0.414*** (0.801) -0.0932 (0.0834) 0.417*** (0.0458) 0.0115 (0.00772) -0.317*** (0.100) 0.243** (0.123) 0.370*** (0.0500) -0.281*** (0.0358) -0.00578* (0.0458) 0.0123 (0.00753) -0.332*** (0.0993) 0.298** (0.125) 0.332*** (0.0466) -0.250*** (0.0329) 0.00632** (0.00304) 0.0297 (0.0468) 0.0128* (0.00772) -0.331*** (0.104) 0.250** (0.123) 0.342*** (0.0483) -0.278*** (0.0351) 0.00600** (0.00302) 0.000984 (0.0467) 0.0144* (0.00764) -0.338*** (0.103) 0.313** (0.126) 0.313*** (0.0463) -0.247*** (0.0338) 0.00644** (0.00301) 0.0102 (0.0698) 0.0180* (0.0103) -0.328** (0.155) 0.178 (0.178) 0.398*** (0.0610) -0.315*** (0.0476) 0.00694** (0.00318) -0.0569 (0.0699) 0.0189* (0.0103) -0.337** (0.156) 0.173 (0.178) 0.390*** (0.0609) -0.319*** (0.0468) -0.00705** (0.00305) 0.0128 (0.0453) 0.0192*** (0.00678) -0.427*** (0.103) 0.397*** (0.130) 0.243*** (0.0366) -0.210*** (0.0249) 0.00872*** (0.00265) -0.00843 (0.00316) -0.0509 (0.0698) 0.0182* (0.0103) -0.328** (0.157) 0.177 (0.179) 0.394*** (0.0611) -0.310*** (0.0475) 0.00704** (0.00318) -0.0360 (0.0689) 0.0196* (0.0103) -0.340** (0.155) 0.169 (0.178) 0.380*** (0.0604) -0.323*** (0.0488) 0.00711** (0.00315) -0.0293 (0.0683) 0.0198* (0.0102) -0.338** (0.153) 0.184 (0.178) 0.373*** (0.0613) -0.311*** (0.0498) 0.00705** (0.00316) -0.0228 (0.0677) -0.222 (0.0607) -0.382* (0.0677) -0.274 (0.0650) -0.0795 (0.0679) -0.109 (0.0828) -0.531* (0.0824) -0.523 (0.0830) -0.527 (0.0803) -0.273 (0.0810) -0.368 (0.226) Yes Yes 0.0950*** (0.0349) 1,440 220 (0.220) Yes Yes 0.0425 (0.0331) 1,440 220 (0.220) Yes Yes 0.0827** (0.0326) 1,440 220 (0.236) Yes Yes 0.102*** (0.0342) 1,440 220 (0.248) Yes Yes 0.0875** (0.0349) 1,440 220 (0.321) Yes Yes 0.141*** (0.0456) 1,447 220 (0.322) Yes Yes 0.128*** (0.0486) 1,447 220 (0.321) Yes Yes 0.137*** (0.0451) 1,447 220 (0.339) Yes Yes 0.148*** (0.0460) 1,447 220 (0.339) Yes Yes 0.144*** (0.0504) 1,447 220 Foreign Ownership Interest/ME SCIC Ownership 0.688*** (0.244) 1.237 (0.0329) 0.493 0.796 Family Ownership Net Assets/ME 0.0892 (0.202) 0.808 (0.748) 0.0891 (0.0837) 0.230 Family Ownership x Cash/ME Earnings/ME All PCSE 2009-2017 Excess Return Government Family Foreign Ownership Ownership Ownership 0.688*** 0.670*** 0.366 (0.245) (0.244) (0.273) Standard errors in parentheses Asterisks (***, **, and *) denote statistical significance at the 1%, 5%, and 10% levels 176 Appendix Appendix Correlation Matrix s own g own f own fr own dom b indep d dual size lev growth b size d hose tobin mb s own -0.248 -0.0592 0.296 -0.046 0.0276 0.1 0.136 -0.0972 -0.0129 0.146 0.0776 0.308 0.197 g own f own fr own dom b indep d dual size lev -0.324 -0.272 0.456 -0.136 -0.181 -0.136 0.0425 -0.0468 -0.169 -0.0885 -0.0986 -0.11 0.0618 0.228 0.039 0.169 0.147 0.0484 0.0663 0.0539 0.148 -0.0258 0.0839 -0.119 0.0905 0.0718 0.33 -0.213 0.0558 0.322 0.297 0.281 0.217 -0.134 -0.138 0.0349 0.0119 -0.0186 -0.17 -0.034 0.0491 0.0863 0.112 0.0088 -0.0724 0.0127 0.0675 0.183 0.0275 0.0064 0.0023 0.0054 0.0122 0.0665 0.172 0.0358 0.0699 0.277 0.108 0.38 0.366 0.16 0.145 0.0741 0.033 -0.218 -0.167 -0.111 growth 0.054 0.0567 0.0833 0.122 b size d hose tobin mb growth b size d hose tobin mb 0.179 0.0702 0.165 0.12 0.138 0.498 Appendix Hetoroskedasticity & Autocorrelation Tests Test for Model on Tobin’s Q Hetoroskedasticity hettest Breusch-Pagan / Cook-Weisberg test for heteroskedasticity Ho: Constant variance Variables: fitted values of tobin chi2(1) = 305.39 Prob > chi2 = 0.0000 xttest3 Modified Wald test for groupwise heteroskedasticity in fixed effect regression model H0: sigma(i)^2 = sigma^2 for all i chi2 (242) = 6.3e+05 Prob>chi2 = 0.0000 177 xttest0 Breusch and Pagan Lagrangian multiplier test for random tobin[id,t] = Xb + u[id] + e[id,t] Estimated results: | Var sd = sqrt(Var) -+ tobin | 3787146 6153979 e | 2121507 4605982 u | 0740228 2720714 effects Test: Var(u) = chibar2(01) = 861.45 Prob > chibar2 = 0.0000 Autocorrelation xtserial tobin s_own g_own f_own fr_own b_indep d_dual b_size growth lev size d_hose Wooldridge test for autocorrelation in panel data H0: no first-order autocorrelation F( 1, 241) = 626.166 Prob > F = 0.0000 Tests for Model on MB hettest Breusch-Pagan / Cook-Weisberg test for heteroskedasticity Ho: Constant variance Variables: fitted values of mb chi2(1) = 482.34 Prob > chi2 = 0.0000 xttest3 Modified Wald test for groupwise heteroskedasticity in fixed effect regression model H0: sigma(i)^2 = sigma^2 for all i chi2 (242) = 2.2e+06 Prob>chi2 = 0.0000 xttest0 Breusch and Pagan Lagrangian multiplier test for random effects mb[id,t] = Xb + u[id] + e[id,t] Estimated results: | Var sd = sqrt(Var) -+ mb | 9906036 9952907 e | 1019235 3192546 178 u | 5565972 7460544 Test: Var(u) = chibar2(01) = 5516.15 Prob > chibar2 = 0.0000 Autocorrelation xtserial mb s_own g_own f_own fr_own b_indep d_dual lev size d_hose Wooldridge test for autocorrelation in panel data H0: no first-order autocorrelation F( 1, 241) = 13.314 Prob > F = 0.0003 Tests for Model 2, Tobin’s Q Hetoroskedasticitydsds hettest Breusch-Pagan / Cook-Weisberg test for heteroskedasticity Ho: Constant variance Variables: fitted values of tobin chi2(1) = 400.89 Prob > chi2 = 0.0000 xttest3 Modified Wald test for groupwise heteroskedasticity in fixed effect regression model H0: sigma(i)^2 = sigma^2 for all i chi2 (242) = 6.4e+05 Prob>chi2 = 0.0000 xttest0 Breusch and Pagan Lagrangian multiplier test for random effects tobin[id,t] = Xb + u[id] + e[id,t] Estimated results: | Var sd = sqrt(Var) -+ tobin | 3787146 6153979 e | 211177 45954 u | 0735492 2711995 Test: Var(u) = chibar2(01) = 847.32 Prob > chibar2 = 0.0000 179 b_size growth Test for Model on MB Hetoroskedasticitydsds hettest Breusch-Pagan / Cook-Weisberg test for heteroskedasticity Ho: Constant variance Variables: fitted values of mb4 chi2(1) = 578.68 Prob > chi2 = 0.0000 xttest3 Modified Wald test for groupwise heteroskedasticity in fixed effect regression model H0: sigma(i)^2 = sigma^2 for all i chi2 (242) = 5.8e+05 Prob>chi2 = 0.0000 xttest0 Breusch and Pagan Lagrangian multiplier test for random effects mb[id,t] = Xb + u[id] + e[id,t] Estimated results: | Var sd = sqrt(Var) -+ mb | 9906036 9952907 e | 1007506 3174123 u | 5590564 7477007 Test: Var(u) = chibar2(01) = 5555.16 Prob > chibar2 = 0.0000 Tests for Model Hetoroskedasticity hettest Breusch-Pagan / Cook-Weisberg test for heteroskedasticity Ho: Constant variance Variables: fitted values of cvna chi2(1) = 36.87 Prob > chi2 = 0.0000 xttest3 Modified Wald test for groupwise heteroskedasticity 180 in fixed effect regression model H0: sigma(i)^2 = sigma^2 for all i chi2 (219) = 2.0e+32 Prob>chi2 = 0.0000 xttest0 Breusch and Pagan Lagrangian multiplier test for random effects cv[id,t] = Xb + u[id] + e[id,t] Estimated results: | Var sd = sqrt(Var) -+ cv | 1.490959 1.221048 e | 5953941 7716179 u | 5770664 7596489 Test: Var(u) = chibar2(01) = 1171.38 Prob > chibar2 = 0.0000 Autocorrelation xtserial cvna oplermb oplersize cf in_sig nwc capexnet netlev d_div s_own g_own f_own fr_own Wooldridge test for autocorrelation in panel data H0: no first-order autocorrelation F( 1, 218) = 38.307 Prob > F = 0.0000 Appendix Models with Insitutional Ownership Table A3 Model Regressions with Institutional Ownership Model 1A Regressions’ results of Tobins’Q and Market to Book by FGLS Independent variables of study include S_Own, G_Own, F_Own, I_Own, B_Indep, D_Dual representing for SCIC ownership, government ownership, family ownership, institutional ownership, board independence and duality Control variables includes Growth rate (Growth), Leverage (Lev), Firm Size (Size), Board Size (B_Size), Year (Year) and Stock Exchange listed (D_Hose) Industry are classified by the Industry Classification Benchmark (ICB) Saples includes 242 firms for the period of 2009-2013 forming 1210 observations FGLS VARIABLES s_own g_own f_own i_own tobin 0.439*** (0.102) 0.0989*** (0.0341) 0.0390 (0.0607) 0.207*** (0.0385) mb 0.455*** (0.109) 0.103*** (0.0360) 0.0413 (0.0642) 0.219*** (0.0412) 0.00239 (0.00868) 0.0899** 0.00164 (0.00913) 0.0988** b_indep d_dual growth lev 181 tobin 0.407*** (0.105) 0.0884** (0.0346) 0.0245 (0.0611) 0.204*** (0.0376) -0.0657* (0.0369) 0.0169 (0.0111) 0.00381 (0.00868) 0.0775** mb 0.421*** (0.114) 0.0919** (0.0363) 0.0249 (0.0645) 0.216*** (0.0403) -0.0681* (0.0387) 0.0193 (0.0118) 0.00320 (0.00914) 0.0851** size (0.0364) 0.0239*** (0.00655) (0.0387) 0.0245*** (0.00696) 0.0463*** (0.0155) Yes Yes 0.436*** (0.159) 1,210 242 0.0519*** (0.0165) Yes Yes 0.426** (0.169) 1,210 242 (0.0368) 0.0273*** (0.00683) -0.00724 (0.00631) 0.0540*** (0.0156) Yes Yes 0.391** (0.164) 1,210 242 b_size d_hose Industry Year Constant Observations Number of id (0.0391) 0.0284*** (0.00725) -0.00864 (0.00674) 0.0599*** (0.0164) Yes Yes 0.372** (0.174) 1,210 242 Standard errors in parentheses *** p