State Control, Corporate Governance and M&A Performance

Nga Pham () and Kok-Boon Oh ()
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Nga Pham: Monash University
Kok-Boon Oh: eGalaxy Solutions

Chapter Chapter 8 in State on Board!, 2021, pp 189-220 from Springer

Abstract: Abstract The first part of this chapter focuses on the impact of state control via industry regulation on firms’ M&A performance. The literature on regulatory economics points to more negative than positive impacts of regulations on firms. Firms in regulated industries have higher costs of capital and spend more organisational and financial resources for regulatory compliance and lobbying activities. According to the annual Global Competitiveness Report of the World Economic Forum, Vietnam ranks relatively low due to the burden of government regulation. We find that M&A of Vietnamese firms in regulated industries generated negative abnormal returns to shareholders; however, firms with the government as the largest shareholder bore less of such impact. Our finding implies that having significant state ownership helped firms better cope with constraints typically found in regulated industries. The second part of this chapter explains how the corporate governance structure of CEO duality affects M&A performance. The analysis uncovers interesting interactions between CEO duality and state ownership. CEO duality was found to be good for firms with state capital, in line with stewardship theory. The chapter offers some reasons for this observation.

Keywords: SOE; Corporate governance; Emerging markets; Vietnam; State control; Regulated industries; CEO duality; Board structure; M&A performance (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-16-3525-0_8

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DOI: 10.1007/978-981-16-3525-0_8

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