Bài viết xem xét tác động của quản trị công ty đến lợi nhuận của các ngân hàng thương mại Việt Nam bằng cách sử dụng dữ liệu bảng của 26 ngân hàng thương mại trong giai đoạn 12 năm từ 2007 đến 2018. Bài nghiên cứu này sử dụng phương pháp hồi quy bình phương nhỏ nhất tổng thể và mô hình ảnh hưởng cố định để kiểm tra mối quan hệ giữa quản trị công ty và lợi nhuận ngân hàng.
Hội nghị Sinh viên nghiên cứu khoa học năm học 2018-2019 QUẢN TRỊ CÔNG TY VÀ LỢI NHUẬN CỦA CÁC NGÂN HÀNG THƯƠNG MẠI VIỆT NAM CORPORATE GOVERNANCE AND PROFITABILITY OF VIETNAMESE COMMERCIAL BANKS GVHD: ThS Võ Hoàng Diễm Trinh SVTH: Lê An Khương Trường Đại học Kinh tế - Đại học Đà Nẵng Ankhuongle2910@gmail.com TÓM TẮT Nghiên cứu xem xét tác động quản trị công ty đến lợi nhuận ngân hàng thương mại Việt Nam cách sử dụng liệu bảng 26 ngân hàng thương mại giai đoạn 12 năm từ 2007 đến 2018 Bài nghiên cứu sử dụng phương pháp hồi quy bình phương nhỏ tổng thể mơ hình ảnh hưởng cố định để kiểm tra mối quan hệ quản trị công ty lợi nhuận ngân hàng Quản trị doanh nghiệp đo lường biến phần trăm sở hữu nhà nước, thành viên độc lập hội đồng quản trị, quy mô hội đồng quản trị thành viên nữ hội đồng quản trị Các kết tồn mối quan hệ dương sở hữu nhà nước lợi nhuận ngân hàng Trong đó, thành viên độc lập có tác động tiêu cực lên lợi nhuận Quy mơ hội đồng quản trị có tác động tích cực lên ROA Mối quan hệ thành viên nữ hội đồng quản trị lợi nhuận ngân hàng cho thấy khơng có ý nghĩa thống kê Từ khóa: Quản trị công ty, lợi nhuận ngân hàng, Việt Nam, Ngân hàng thương mại Việt Nam ABSTRACT The study examines the effect of corporate governance on bank profitability in the Vietnamese context by using panel data of 26 commercial banks during the period of twelve years from 2007 to 2018 This paper employs pooled the OLS, fixed- effect model (FEM) to investigate the relationship between corporate governance and bank profitability A set of variables including state ownership, board independence, board size, and female board members is proxy for corporate governance The results indicate that the relationship between state ownership and bank profitability is significantly positive Whereas, the board independence and profitability have a significantly negative effect on profitability Board size has a significantly positive effect on profitability in term of ROA There is no sign of significant in the relation between female board members and bank profitability Keywords: Corporate governance, bank profitability, profitability, Vietnam, Vietnamese commercial banks Introduction 1.1 Background and research motivation Corporate governance is a topic that has drawn considerable attention in academic circles, governments, corporations as well as banking, especially since the collapse of many big companies in the US and the UK In Asia, it is believed that weak corporate governance is the main reason causing the banking crisis in 1997 In addition, the remuneration policy for the executive director of the bank is one of the main reasons for the 2008 US financial crisis Therefore, corporate governance should be concerned and examined deeply In Vietnam, corporate governance is considered as a long-term factor to change the business mindset 27 Trường Đại học Kinh tế - Đại học Đà Nẵng in order to meet the requirements of the global economy In the context of banking, because of its special features, commercial activities of commercial banks suffer a lot of risks and strongly impact on the national economy so corporate governance surely takes an important role Although the empirical evidence of the relationship between corporate governance and bank’s performance is documented with different approaches around the world, this relationship has not been studied comprehensively in Vietnam Therefore, I would like to contribute to the literature in Vietnam by providing a more detailed insight of the effect of corporate governance on bank profitability 1.2 Research objectives The objective of this study is to figure out the relationship between corporate governance and the profitability of Vietnamese Commercial banks The research aims to provide an in-depth analysis of the relationship between corporate governance and the bank’s profitability In addition, the research also provides implications for policymakers and managers to review the regulations relating to corporate governance as well as the bank’s profitability 1.3 Research structure This paper begins with the main theories including agency theory and resource- based theory and some research discuss about this topic around the world Section two discusses hypothesizes, empirical models as well as methods investigating in the research Next section goes into detailed description of the sample, correlation matrix and results of pooled OLS, FEM and GMM methods Finally, some discussions and implications are given for bank managers and policy makers based on results 1.4 Literature review Firstly, this study investigates the impact of corporate governance on bank profitability on the fundamental of two basic theories including agency theory and resource-based theory Agency theory, which derived from economic theory, is developed by Alchian & Demsetz (1972), then Jensen & Meckling continued to develop in 1976 They conduct combination of factors from three theories including agency theory, property cost theory and finance theory In more detail, it provides that agency problem occurs when ownership of resources is separate from managing resources Therefore, Asma'a Al-Amarneh (2014) suggests that it is important to have good corporate governance to solve problems related to agents The resource-based theory which is introduced by S.A Lipman & Rumelt (1982), Wernerfelt (1984), Dierickx & Cool (1989), Grant (1996), Helfat & Peteraf (2003), especially Barney (1996, 1991) says that to attain and maintain a sustainable competitive advantage, company’s resources play an important role Firms will have a good performance if they own valuable resources and suitably use with their strategies Because resources are not generated by themselves to gain sustainable competitive advantage (Barney, 2001) They need a board of directors who contribute in establishing the achievement of sustainable competitive advantage of the firm through corporate governance This can be seen clearly in the research of Rahman & Mohamed Ali (2006) The important role of corporate governance and bank profitability is confirmed again Studies referred to the relation between corporate governance and bank profitability around the world have been widely published and mainly focus on ownership and board Pi & Timme (1993) indicate that cost efficiency and return on assets (ROA) have a negative correlation with Chairman-CEO duality and are unrelated to the proportion of inside (outside) directors Booth, Cornett, & Tehranian (2002) use a sample of USA firms during the year of 1999 and find that the proportion of external directors is negatively related to internal stock ownership CEO- Chairman duality is less while insider stock ownership increase Cornett, McNutt, & Tehranian (2009) take a sample of the largest bank holding companies (BHCs) headquartered in the US and suggest that there is a positive relation between CEO pay- for- performance sensitivity (PPS), board independence, capital and, earnings, whereas a negative relationship between them and earnings management is found Praptiningsih (2009) investigates a sample of 52 firms in Indonesia, Thailand, Philippines, and Malaysia The result shows that there is an insignificant relationship between internal 28 Hội nghị Sinh viên nghiên cứu khoa học năm học 2018-2019 control monitoring mechanisms and corporate performance The results of Arouri, H, Hossain (2011) show that governance variables such as CEO duality and board size appear insignificant impact on performance Aebi, Sabato, & Schmid (2012) consider that banks, in which the CRO directly reports to the board of directors and not to the CEO (or other corporative entities), exhibit significantly higher stock return and ROE during the crisis In contrast, standard corporation governance variables are mostly insignificantly or even negatively related to bank’s performance during the crisis Adams & Mehran (2012) recognize that there is no correlation between board independence and performance Duc (2013) concludes that female board members, CEO duality, working experience of board members, the working experience of board members, and the compensation of board members have the positive effects on ROA, while board size produces negative ones Al-Amarneh (2014) suggests that board size increases, the bank performance increases Vo & Nguyen (2014) conduct study with Vietnamese firms and find that there is a positive correlation between duality role of the CEO and firm performance Azeez (2015) concludes the correlation of board size with firm performance is negative whereas the separation of CEO and chairman has a significant positive relationship with the firm performance Akshita, Chandan (2016) suggest the larger board members are, the better performance is Paniagua, Rivelles, & Sapena (2018) indicate that a higher number of board members, a lower ROE is Hypotheses development and methodology Based on agency theory, resource-based theory, and the listed research, four hypothesizes will be tested in this study The first hypothesis (H1) is there is a positive relationship between state ownership and bank profitability The second one (H2) is board independence and bank profitability have a positive correlation The third hypothesis (H3) is there is a negative relationship between board size and bank profitability And the final one (H4) is the correlation between female board members and bank profitability is positive Data was collected from the Stoxplus database and hand- collected from annual financial statements Vietnamese commercial banks during the 12- year period from 2007 to 2018 Twelve years of data are considered for each of 26 commercial banks resulting in a panel dataset of 312 bank-year observations and the data is composed of some missing bank-year observations due to data unavailability Based on the conceptual framework of previous papers like James & Joseph (2015), Al-Amarneh (2014), Bhagat & Bolton (2008), Duc (2013), to examine the relationship between corporate governance and profitability in Vietnamese commercial banks, a panel data regression model was adopted in the analysis The baseline model is first regressed by using pooled OLS estimation to investigate whether corporate governance has effects on bank profitability However, the stability and efficiency of the coefficients in panel data analysis based on the pooled OLS regression may be doubted To handle obstacles relating to unobserved heterogeneity which is one of the most frequent occurrences in empirical studies (Badi H Baltagi, 2005), the Fixed- effect model (FEM) is used Wintoki, Linck, & Netter (2012) argue that the errors related to endogenous problems still exist in testing this relationship that makes the result from using OLS or FE to estimate will be biased, especially with short-table data (Cameron, 2008) so the Generalized Method of Moments (GMM) is employed In this study, bank profitability (PROFIT) is measured by ROA and ROE ROA is calculated by dividing net income by total assets and shows that ability of firms in generating income from assets (Andres & Vallelado, 2008; Weisbach, 1988; Hadi, Abdul, & Corporate, 2007) Meanwhile ROE is defined as the ratio of net income to total equity and is considered a measure of how effectively management is using a company’s assets to create profits (Pathan & Faff, 2013) In term of corporate governance (CG), this paper uses various variables including State ownership (STATE) to measure the structure of ownership by considering the proportion of holding shares by the government (Bai, Liu, Lu, & Song, 2004); board 29 Trường Đại học Kinh tế - Đại học Đà Nẵng independence (BRIND) is referred to the number of independent members in board (James & Joseph, 2015; Rashid & Khan, 2014; Liang et al., 2013; Praptiningsih, 2009; Bhagat & Bolton, 2008; R Adams & Mehran, 2003; Booth et al., 2002; Weisbach, 1988); board size (BOARD) is calculated by considering how many members there are in the board of banks (James & Joseph, 2015; Al-Amarneh, 2014; Hasan & Xie, 2012; Praptiningsih, 2009; Coles et al., 2008 ; R Adams & Mehran, 2003) and female board members (FEB) is the numbers of women present on the board (Duc, 2013), (Smith, Smith, & Verner, 2006), (Carter, Simkins, & Simpson, 2003), (Kochan et al., 2003), (Shrader, Blackburn, & Iles, 1997) Control variables consist of bank size, efficiency ratio, deposit ratio, loan ratio, loan loss provision and dummy year Result Descriptive statics is firstly investigated in the study to describe features of a specific data set by giving short summaries about the sample and measures of the data Table Statistical summary of variables Variable Obs Mean Std Dev Min Max ROA 305 0.010 0.009 -0.060 0.060 ROE 304 0.105 0.073 0.0007 0.445 STATE 266 0.217 0.293 BRIND 303 0.842 0.921 BOARD 303 7.145 1.910 15 FEB 289 1.125 1.086 BKSIZE 306 13.829 0.565 12.309 15.118 DEP 307 0.686 0.147 0.269 0.967 EFF 304 -0.51 0.14 -0.930 -0.160 LOA 306 0.538 0.127 0.114 0.845 LLP 304 0.009 0.007 0.0003 0.052 Source: Research findings Table 4.1 illustrates the descriptive statistics for the variables in the study It can be seen clearly that ROA ranges from a minimum value of -0.06 to a maximum value of 0.06 and a mean equal to 0.01 While, ROE ranges from a minimum value of 0.0007 to a maximum value of 0.445 and a mean equal to 0.101 In term of independent variables, the mean of STATE displayed in table 4.1 is 0.217 with standard deviation is 0.293, while the value is and the max value is In addition to that, the number of independent members in board ranges from to members and the mean value of BRIND is 0.842 with the standard deviation is 0.921 Meanwhile, the range BOARD is from to 15 and its mean is 7.145 with standard deviation is 1.910 Similarly, FEB has a mean value of 1.125 with standard deviation is 1.086 and the minimum and maximum value is and Table 4.2 Correlation matrix among variables ROA ROE ROA 1.000 ROE 0.757 1.000 STATE 0.096 0.270 STATE BRIND BOARD 1.000 30 FEB BKSIZE DEP EFF LOA LL P Hội nghị Sinh viên nghiên cứu khoa học năm học 2018-2019 BRIND -0.121 -0.118 -0.110 1.000 BOARD 0.129 0.275 0.149 0.090 1.000 FEB -0.121 0.027 0.238 0.070 0.293 1.000 BKSIZE -0.187 0.292 0.391 0.025 0.435 0.266 1.000 DEP -0.102 -0.053 0.055 0.031 0.128 0.066 0.264 1.000 EFF 0.522 0.514 0.019 0.048 0.045 0.001 0.052 0.176 1.000 LOA -0.013 0.059 0.306 0.002 0.051 0.079 0.232 0.572 0.188 1.000 LLP -0.171 -0.042 0.252 -0.007 0.032 -0.090 0.309 0.244 -0.137 0.100 Sources: Research findings Table 4.2 illustrates the correlation matrix of both dependent and independent variables All of the correlation coefficients in table 4.2 are less than 0.8 Following Klein's rule of thumb, it can be concluded that the independent variables in the equation are not multicollinear Table 4.3 shows the pooled OLS and FEM results In general, OLS regression results show that corporate governance has effects on bank profitability In detail, the correlation coefficients of state ownership (STATE) with return on asset (ROA) and return on equity (ROE) are positive (0.0066 and 0.0553, in turn) at 1% significance level This result is also consistent with previous research result of Viet & Vinh (2016) in Vietnam Surprisingly, the relationship between ROA, ROE and board independence is negative (0.00012 and -0.0117 respectively) and they are statistically significant at 1% level Both ROA and ROE are found having the significant positive relationship with board size This indicates that the profitability of banks increases with bigger board members In contrast, there is a negative correlation between ROA, ROE and female board member at significant levels of 10% and 5%, respectively Table 4.3 Pooled OLS, FE regression results of model DEPENDENT VARIABLES: ROA & ROE VARIABLES STATE BRIND BOARD FEB BKSIZE DEP OLS FEM ROA ROE ROA ROE 0.0066*** 0.0553*** 0.0168*** 0.1587*** (3.91) (3.40) (2.87) (2.94) -0.0012*** -0.0117*** -0.0014*** -0.0122*** (-2.62) (-2.73) (-3.45) (-3.20) 0.0013*** 0.0089*** 0.0008*** 0.0021 (5.34) (3.79) (3.14) (0.84) -0.0013*** -0.0093** -0.0005 0.0013 (-2.98) (-2.19) (-0.98) (0.28) -0.0050*** 0.0301*** -0.0064*** 0.0112 (-5.52) (3.43) (-4.81) (0.92) -0.0067* -0.1130*** -0.0186*** -0.2093*** (-1.79) (-3.12) (-5.32) (-6.50) 31 1.0 00 Trường Đại học Kinh tế - Đại học Đà Nẵng EFF 0.0009*** 0.0083*** 0.0009*** 0.0085*** (11.11) (10.74) (13.56) (13.48) -0.0028 -0.0214 0.0021 0.0482 (-0.66) (-0.52) (0.47) (1.18) -0.0499 -0.5699 -0.0808 -1.3038** (-0.76) (-0.90) (-1.26) (-2.21) 0.0785*** -0.2683** 0.1033*** 0.0461 (6.80) (-2.41) (5.60) (0.27) Observations 249 249 249 249 R-squared 0.4620 0.4647 0.6245 0.5629 Year dummies YES YES YES YES Adjusted R-squared 0.442 0.445 0.361 0.342 25 25 LOA LLP Constant Number of ID t-statistics in parentheses *** p