The effects of corporate governance mechanisms on the financial leverage–profitability relation

Pham, Hanh Song Thi; Nguyen, Duy Thanh

doi:10.1108/mrr-03-2019-0136

Cited by 21 publications

(24 citation statements)

References 68 publications

(78 reference statements)

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“…However, the mean of the percentage of shares owned by the Vietnamese government in listed firms for this period is nearly 16%, which is much lower than the previous time (39%-43% during the period from 2005 to 2012). This decrease proves the strong efforts of the Vietnamese government in reducing its direct control and command in order to establish a multisectoral commodity economy regulated by the market (Tran, Nonneman, & Jorissen, 2014). One more noticeable change for the period studied in the research can be seen at the propotion of firms' shares owned by foreign investors.…”

Section: Descriptive Statisticsmentioning

confidence: 90%

Determinants of Capital Structure:The Case in Vietnam

Vu¹,

Tran²,

Doan³

et al. 2020

JAFEB

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This is a quantitative research, underpinned by the philosophy of natural science and deduction approach that examines the impact of the various aspects of corporate governance mechanism on the choice of capital structure of Vietnamese listed firms. We focus on the effect of factors such as the board size, the board independence, and especially different ownership structures, which include the managerial ownership, the state ownership, the concentrated ownership, and the foreign ownership. They are the main scopes of corporate governance and are supposed to be relevant to determine the corporate financing choice. To explain the causal relationship between factors, we construct the regression model and then test it by using different statistical method approaches, including the pooled OLS, the fixed effects model, and the random effects model. Data are collected from 336 firms with shares listed in the Ho Chi Minh City Stock Exchange in Vietnam, totaling 1583 observations. Overall, the results reveal that the board size, state ownership, and concentrated ownership have positive impact on the firm's capital structure, whereas foreign ownership appears to have negative influence on the capital structure. The research does not find evidence of a the correlation between board independence, managerial ownership and corporate capital struture.

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Section: Descriptive Statisticsmentioning

confidence: 90%

Determinants of Capital Structure:The Case in Vietnam

Vu¹,

Tran²,

Doan³

et al. 2020

JAFEB

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“…Kep.315/BEJ/06-2000 concerning Securities Listing and OJK Regulation No.33/POJK.04/2014, requires that the Listed Company where the company is listed on the IDX must have at least 30% of the total number of commissioners. According to Pham & Nguyen (2020), the existence of the Does Short-Term Debt…”

Section: Moderation Effect Of Independent Boc Size On the Relationshi...mentioning

confidence: 99%

“…This study develops the research of Pham & Nguyen (2020) which explains the the influence of the existence of corporate governance between the influence of financial leverage and profitability. The difference with the research conducted by Pham & Nguyen (2020) is that the research does not separate short-term and long-term debt, while this study uses short-term debt as the independent variable and the moderating variable is the corporate governance mechanism.…”

Section: Introductionmentioning

confidence: 99%

Does Short-Term Debt increase Profitability? The Role of Corporate Governance as a Moderating Variable

Widuri

Darmasaputra²,

Cecilia³

2022

IJOBP

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This research is conducted to inspect the relationship of Short-Term Debt as a predictor for the financial leverage on Profitability of the company. In the analysis, Short-Term Debt will act as the independent variable and Profitability will be the dependent variable using Return on Equity (ROE) as the indicator. In the model analysis, corporate governance will be used as the moderating variable to bridge the relationship between the independent and dependent variable. In this study, the mediating variable of corporate governance uses Board of Directors (BOD) and board of commissioner (BOC) size, board of independent commissioners’ size, managerial and also the institutional ownership. From the analysis, it is shown that Short-Term debt has a significant positive impact on the company’s Profitability. In addition, board size weakens the relationship between financial leverage and profitability. Board size and institutional ownership significantly strengthen the relationship between financial leverage and profitability. Board of independent commissioners’ size and managerial ownership did not moderate the relationship between financial leverage and profitability.

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“…State-owned firms and their partners get access to critical resources and avoid interventions by the government, which are more frequent in low developed markets (Okhmatovskiy, 2010). While privately held firms regularly perform better in market-oriented institutional environments, it is often the other way round in less developed economies (Yang et al, 2015;Pham and Nguyen, 2019). As a result, alliances that take place in less developed countries also tend to have a higher performance when the partner is state-owned (Luo, 1997).…”

Section: State Ownershipmentioning

confidence: 99%

A substitute for poor institutions? Interorganizational affiliations in the alliance formation process

Rossmannek¹,

Rank²

2021

MRR

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Purpose This study aims to investigate how the home country institutional development influences the alliance formation process. Design/methodology/approach A network of strategic alliances between 95 airlines over a 5-year period is analyzed with stochastic actor-oriented models [i.e. Simulation investigation for empirical network analysis (SIENA)]. Robustness analyses use a subsample of these airlines over a period of 10 years. Findings The results demonstrate that the membership in a firm group and a high share of state ownership are more beneficial for the number of alliances if the firm originates from a country with low institutional development. Practical implications Firms from less developed countries can use affiliations (e.g. to firm groups or the government) as signals to attract international alliance partners. Social implications Policymakers from less developed countries should support the development of (local) firm groups to stimulate interorganizational cooperation. Originality/value Firms form alliances based on two aspects: preferences for alliance partners and attractiveness to potential partners. Prior studies outlined that institutional development affects the preferences of firms for alliance partners. This study demonstrates how the institutional development influences the attractiveness to potential partners.

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The effects of corporate governance mechanisms on the financial leverage–profitability relation

Cited by 21 publications

References 68 publications

Determinants of Capital Structure:The Case in Vietnam

Determinants of Capital Structure:The Case in Vietnam

Does Short-Term Debt increase Profitability? The Role of Corporate Governance as a Moderating Variable

A substitute for poor institutions? Interorganizational affiliations in the alliance formation process

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