A Tale of Two Cities: Corporate Governance and Firm Valuation in Vietnam
63 Pages Posted: 29 Jan 2016
Date Written: January 27, 2016
Abstract
This study examines the effect of market forces on the relation between corporate governance and firm valuation using a unique institutional setting in Vietnam, where there are two exchanges, one located in Ho Chi Minh City, the country’s business center whereas the other one located in Hanoi, the capital city close to the government. This setting allows a comparison of the impact of market force on corporate governance dynamics while controlling for legal jurisdiction. Although firms listed on the two exchanges exhibit similar quality of corporate governance practices, market valuation of firms in Ho Chi Minh City appears to be more responsive to the quality of corporate governance practices than that of firms in Hanoi. The findings suggest that market forces play a critical role in enhancing the benefits of corporate governance in emerging markets.
Keywords: Corporate governance; firm valuation; Vietnam
JEL Classification: G32; G34
Suggested Citation: Suggested Citation