A Tale of Two Cities: Corporate Governance and Firm Valuation in Vietnam

63 Pages Posted: 29 Jan 2016

See all articles by J. Thomas Connelly

J. Thomas Connelly

Sasin School of Management, Chulalongkorn University

Piman Limpaphayom

Portland State University - School of Business Administration

Hien Thu Nguyen

Vietnam National University - Ho Chi Minh City (VNU-HCM)

Thanh Duy Tran

Vietnam National University - Ho Chi Minh City (VNU-HCM)

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

Connelly, J. Thomas and Limpaphayom, Piman and Nguyen, Hien Thu and Tran, Thanh Duy, A Tale of Two Cities: Corporate Governance and Firm Valuation in Vietnam (January 27, 2016). Available at SSRN: https://ssrn.com/abstract=2723692

J. Thomas Connelly

Sasin School of Management, Chulalongkorn University ( email )

Bangkok 10330
Thailand

Piman Limpaphayom (Contact Author)

Portland State University - School of Business Administration ( email )

Portland, OR 97207-0751
United States

Hien Thu Nguyen

Vietnam National University - Ho Chi Minh City (VNU-HCM) ( email )

6 Quarter, Linh Trung Ward
Thu Duc District
Ho Chi Minh City
Vietnam

Thanh Duy Tran

Vietnam National University - Ho Chi Minh City (VNU-HCM) ( email )

6 Quarter, Linh Trung Ward
Thu Duc District
Ho Chi Minh City
Vietnam

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