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Foreign Investment, Corporate Governance and Firm Performance in Vietnam Listed Companies


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Indian Journal of Economics and Development
Volume 15 No. 4, 2019, 499-507
DOI: 10.5958/2322-0430.2019.00065.9
Indexed in Clarivate Analytics (ESCI) of WoS

P.T. Dong1*, T.T. ThanhThuy2 and N.T. ThanhTra3
1Academy of Policy and Development, Hanoi City, Vietnam.2Foreign Trade University, Hanoi city, Vietnam
and 3Binh Dinh Institute for Socio-economic Development Studies, Vietnam
*Corresponding author’s email:

This paper examined the effect of corporate governance on firm performance in foreign-invested Vietnamese companies. It used data on 36 companies that were listed on the Ho Chi Minh Stock Exchange (HOSE) in the period 2012-2016. This study investigated the influence of three aspects of corporate governance on return on equity (ROE) in these companies; board characteristics, ownership structure, and firm characteristics. The findings of this study discovered that corporate governance had a strong effect on the performance of foreign-invested companies on HOSE in Vietnam. One factor showed a positive effect on firm performance in respect of board characteristics is the ratio of women to men, although the study concluded that the effect of a high ratio of foreigners on the board had a negative impact. In respect of ownership structure, a statistically significant relationship was found between ownership concentration and firm returns. Regarding firm characteristics, it was found that larger firms with foreign investment had slightly better performance. Final conclusions included that companies should be mindful of the impact of board characteristics in particular with respect to firm performance. Companies ought to promote gender equality and maintain an appropriate ratio between foreign and Vietnamese board members in order to achieve optimal firm performance. There was also a positive and statistically significant relationship between ownership concentration and firm performance. The results implied that large shareholders play an essential role in the debate on shareholders’ value creation and performance of foreign-invested HOSE enterprises.

Corporate governance, firm performance, foreign investment, Vietnam.

JEL Codes
C58, E22, F21.

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  • Contents IJED 15(4) 2019

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