Characteristics of the Board of Directors and Corporate Financial Performance—Empirical Evidence

Nguyen Van Chien () and Thi Ngoc Thuan Huynh
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Nguyen Van Chien: Institute of Graduate Studies, Thu Dau Mot University, Thu Dau Mot City 75000, Vietnam
Thi Ngoc Thuan Huynh: Institute of Graduate Studies, Thu Dau Mot University, Thu Dau Mot City 75000, Vietnam

Economies, 2023, vol. 11, issue 2, 1-15

Abstract: The objectives of the research are to investigate the characteristics of the Board of Directors on the financial performance of the enterprise using sample data from 52 construction and real estate enterprises listed on the Vietnam stock exchange in the period 2006–2020. Using typical regression methods such as pooled OLS, FEM, REM, and assessing the defects of the research model, the FGLS method is selected. At the same time, due to the existence of endogenous phenomena and the nature of interdependence among enterprises in Vietnam, research using the instrumental variables two-step generalized method of moments (IV-GMM) is conducted in order to correct for cross-sectional dependence, autocorrelation, endogeneity, and heteroskedasticity in the analysis. Research results suggest that board size, female board members, meeting frequency, and board members’ education have a positive influence on financial performance. Moreover, as the independence of the Board of Directors increases, the business efficiency decreases. The research also found a positive relationship of tangible fixed assets, and a negative relationship between capital structure choice, firm size, and corporate financial performance. Finally, we propose some implications for enhancing the financial performance of Vietnamese firms.

Keywords: board of directors; endogeneity; cross-sectional dependence; firm performance (search for similar items in EconPapers)
JEL-codes: E F I J O Q (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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