The Relationship between Productivity and Firm’s Performance: Evidence from Listed Firms in Vietnam Stock Exchange

Abstract

The study aims to examine the impact of productivity in addition to the policy of increasing the foreign investors' ownership rate on the performance of businesses which were listed on Vietnam's stock exchange market from 2010 to 2017. With the database of 3.961 observations, the study employs a statistical method -multiple regression to estimate the relationship between labor productivity, foreign ownership as well as other firm-level characteristics and firm performance. Research findings show that increasing labor productivity and increasing foreign ownership rates help increase firm performance. In addition, except for financial leverage, variables such as liquidity and firm size have positive effects on firm performance measured by Tobin's Q. These findings have theoretical contributions and practical implications for managers, investors and government in Vietnam. Managers should pay attention to improving labor productivity through employing incentive mechanisms, building a good working environment, investing in technology, etc. in order to enhance the firm performance. Investors could utilize the labor productivity and foreign ownership indicators to select stocks of good companies for investment. For Vietnamese government, relaxing the limit of foreign ownership and accelerating the divesting of State capital in Stateowned enterprises could help increase the investment scale of foreign investors and resulting in positive effects on the firm performance.

Government Control and Privatized Firms’ Performance: Evidence from Vietnam

“…Similarly, Model 4 indicates that 1 percentage point increase in managerial ownership, domestic institutional ownership and foreign institutional ownership also leads to an increase in Tobin's Q by 0.0033, 0.0028 and 0.0047, respectively. These findings are consistent with the findings of previous studies (Ang et al, 2000;Bhagat & Bolton, 2008;Elyasiani & Jia, 2010;Nguyen, Nguyen, Ngo, & Nguyen, 2019). This confirms that managerial ownership and institutional ownership are important factors in enhancing the performance of privatized firms during the post-privatization period.…”

Does Good ESG Lead to Better Financial Performances by Firms? Machine Learning and Logistic Regression Models of Public Enterprises in Europe

“…Nonetheless, European companies that aim at improving or increasing their long−term financial and economic performance should improve their labor productivity. 'Labor productivity can be increased by appropriate incentive mechanisms and by building a good working environment for employees' [78] (p. 137). In its Council Decision n. 1215 of 2018, the Council of the European Union [79] has set new guidelines for employment policies of the member states.…”

Private Ownership Structure and Firm Productivity: A Firm - Level Empirical Evidence from Nigeria

“…The behavioural theory was first used and developed by [12]. The theory is based on modern, multi-product firm decision making, typical of firms that have ownership different from its management and are under uncertain, imperfect market.…”

“…For [12], firms cannot be taken to be a monolith since different people in the firm exhibit conflicting interests and aspirations. This follows from the fact that firm behaviour is seen as a weighted outcome the conflicts that may arise in the firm.…”

“…The theory further states that the firm may be interested in pursuing five basic objectives such as; production, inventory, sales, market share, and/or profit goals. This theory has implication on firm productivity since conflicting behaviours, against firm objectives, within the firm can hamper productivity [12].…”