Corporate Governance and Stock Price Synchronicity: Empirical Evidence from Vietnam

Anh Huu Nguyen, Thu Minh Thi Vu and Quynh Truc Thi Doan
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Anh Huu Nguyen: School of Accounting and Auditing, National Economics University, Hanoi 100000, Vietnam
Thu Minh Thi Vu: School of Accounting and Auditing, National Economics University, Hanoi 100000, Vietnam
Quynh Truc Thi Doan: School of Accounting and Auditing, National Economics University, Hanoi 100000, Vietnam

IJFS, 2020, vol. 8, issue 2, 1-13

Abstract: This research is conducted to investigate the impact of corporate governance on stock price synchronicity in the context of the Vietnamese market. The paper tests four hypotheses proposing the effect of four crucial components of corporate governance including board size, board independence, managerial ownership, and foreign ownership on stock price synchronicity. The study sample includes 247 non-financial listed companies on the Ho Chi Minh Stock Exchange (HOSE) in Vietnam over a period of five years from 2014 to 2018. The fixed effects model is employed to address econometric issues and to improve the accuracy of the regression coefficients. The research results show the positive impact of board size and foreign ownership but the negative impact of managerial ownership on stock price synchronicity. This study confirms the viewpoint that stocks in the market move more together when the firms’ corporate governance gets better. In other words, the research findings suggest that low synchronicity signifies the corporate intransparency and weak information environment and vice versa. From this, the paper provides a new insight to managers on how to improve stock price synchronicity with corporate governance.

Keywords: corporate governance; stock price synchronicity; firm-specific information; fixed effects model; Ho Chi Minh stock exchange (HOSE); information environment (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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