ON THE DETERMINANTS OF CAPITAL STRUCTURE: AN EMPIRICAL STUDY OF VIETNAMESE LISTED FIRMS

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TABLE OF CONTENTS
Page
TITLEPAGE
1
2
DECLARETION 3
ACKNOWLEDGEMENT 4
ABSTRACT 5
TABLE OF CONTENTS 6
LIST OF TABLES
LIST OF FIGURE
LIST OF AC
RONYMS
8
9
10
Chapter
1 INTRODUCTION 11
1.1
Background of the Study
11
1.2
Objective of the Study
12
1.3
Important of the Study
12
2
THEORETICAL PERSPECTIVES, LITERATURE REVIEW AND
STUDIES, RESEARCH QUESTIONS AND HYPOTHESES
14
2.1
Introduction
14
2.2
Board and Women in the boardroom
14
2.3
Banking and how is bank work?
16
2.4
Corporate Governance
17
2.5
Firm Performance
19
2.5.1 Financial Performance
20
5
2.6
The link between Woman on the board and firm performance
21
2.6.1 Agency Theory
22
2.6.2 Stewardship theory
23
2.7
Related Studies with the same problems
24
2.8
Corporate Governance in Viet Nam
26
2.8.1 Status of Corporate Governance in Viet Nam
26
2.9 Research questions and Hypothesis
28
2.9.1 Research questions
28
2.9.2 Hypothesis
28
3
RESEARCH METHOD
29
3.1 Introduction
29
3.2 Quantitative research
29
3.3 Qualitative research
30
3.4 Sample and Sampling Technique
30
3.5 Research Instrument and Analyzing methods
31
3.5.1 Research Instrument 31
3.5.2 Analyzing methods 31
3.6 Variables 32
3.6.1 Independent variables 32
3.6.2 Control variables 32
3.6.3 Dependent variables 33
3.7
Empirical Model
35
4
PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
36
4.1 Descriptive Statistic 36
4.2 Correlation Matrix
38
4.3 Finding Results
38
6
4.3.1 Hypothesis 1
38
4.3.2 Hypothesis 01
40
4.4 Finding relationship between control variable and Vietnamese banks performance
42
4.4.1 Finding relationship between bank size and bank performance
42
4.4.2 Finding relationship between Leverage and bank performance
43
CONCLUSION, LIMITATION AND SUGGESTION FOR FUTURE RESEARCH
REFERENCE 47
APPENDIX 50
List of Tables
Table Title Page
1
Proportion of Women on the board in Vietnamese Banks
36
2 Variables Descriptive Statistic 36
3 Correlation Matrix 38
7
4
Data analysis of relationship between women on board in Vietnamese banks
and bank performance (measure by ROE)
39
5
Data analysis of relationship between women on board in Vietnamese banks
and bank performance (measure by Tobin’s Q)
40
8
List of Figures
Table Title Page
1
Conceptual framework
28
2 Regression Analysis 31
3
Correlation graph between Women on board and Bank performance (Return on
Equity)
40
4
Correlation graph between Women on board and Bank performance (Tobin’s Q)
42
5
Correlation graph between bank size and Bank performance (Return on Equity)
43
6
Correlation graph between Leverage and Bank performance (Return on Equity)
44
9
List of Acronyms
BoC : Board of Commissioners
BoD : Board of Directors
CEO : Chief Executive Officer
CFO : Chief Finance Officer
CG : Corporate Governance
FDIC : Federal Deposit Insurance Corporation
IBR : International Business Report
ICGN : International Corporate Governance Network
KPIs : Key Performance Indicator
OECD : Organization for Economic Cooperation and Development
ROA : Return on Assets
ROE : Return on Equity
ROI : Return on Investments
ROIC : Return on Invested Capital
ROS : Return on Sales
TSR : Total Shareholder’s Retur
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INTRODUCTION
1.1 Background
A recent report from the International Business Report (IBR), explores the global shift
in the number of women at the top of the business world and examines ways to make this
growth permanent and parity possible. Key findings from the survey include: women hold 24%
of senior management roles globally, a three point increase over the previous year. There has
been a sharp rise in China, with 51% of senior management positions held by women,
compared to 25% last year. The proportion of businesses employing women as CEOs has risen
from 9% to 14%. Education and talent management may work in tandem with flexible work
arrangements, which 67% of respondents offer, to increase the number of women in top
leadership. Just 19% of board roles around the world are held by women. Although quotas have
been put into place around the globe to increase women’s participation in boards, 55% of
respondents oppose such quotas.
In politics, an increasing number of women won elections: South Korea, for instance,
recently swore in its first female president. Approximately 17 countries have women as head of
government, head of state or both (a number that, according to the Inter-Parliamentary Union
and UN Women, has more than doubled since 2005), and the world average for women in
parliament totaled 20.4% as of 1 February 2013.
In 2012, though women comprised over a third of the workforce in the United States,
they held a mere 14.3 percent of executive officer positions at Fortune 500 companies and only
8.1 percent of executive officer top-earner positions2. Of the FTSE 100, women held only 15%
of board seats and 6.6% of executive positions in 2012. In the Asia Pacific region, the
percentage of women on boards was about half that in Europe, Australia and North America.
The IBR survey, which includes both listed and privately held businesses, indicates a 3%
increase in the number of women in senior management positions from 2011 to 2012, with 24%
of businesses with women in senior management roles globally in 2012 (compared to 21% in
2011).
In 2013, China is country which is the highest rate of woman senior management with
51%. The second country is Poland with 48%. Viet Nam is ranking of ninth with 33% of
woman senior manager.
Several researchers have examined the trend and the impact of the change in
workforce diversity, especially in the top management level, on business performance (see
for example Terjesen & Singh 2008; Dejardin 2009). In particular, participation by
women in top management is expected to have positive impact on firm performance
(Robinson 2008).
The attributes that impact on the ability of the board members to effectively
perform their job include their capabilities and skills (Carter et al. 2007), educational and
cultural background (Kusumastuti, Supatmi & Sastra 2007), their possible involvement in
multiple directorships, the level of share ownership, and the type of remuneration
(Campbell & Vera, 2008). These attributes affect firm performance (Carter et al. 2007).
There is no observable performance benefit to adding more women to the board of
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directors. Out of all the regressions performed not a single one found a significant and positive
relationship between the percentage of women on the board and performance (Carl Fagergren
& Samuel Hurst, spring 2012).
Prior studies have found differences in the impact of boards on firm performance,
this study focuses on testing hypotheses about effected from Woman on the board to firm
performance. Further, the study presents results from a qualitative and quantitative study of
Vietnamese women board members regarding the role they play in enhancing firm
performance. The purpose of the study was to throw light on the relationship between
woman on the board and performance.
1.2 Objectives of the study
An objective of the study is to examine in the Vietnamese bank, the link between
women’s participation in top management and its impacts on the financial firm.
. The study only focuses on bank and firm performance. The underlying assumption of
this research is that the presence of women boards may impact firm performance. A diverse
workforce has been found to be generally beneficial for business (Herring 2009).
In the current study, these competing arguments are examined in the Vietnamese
context by using several theories as agency, stewardship, legitimacy, and stakeholder theories.
Woman on the board is very importance in the context of corporate governance. However, it is
still inconclusive whether women on board affects firm performance positively or negatively.
Therefore, the principal objective of this study is to test the effect of woman in the
boardroom on firm performance.
1.3 Importance of the study
In transaction economics as Viet Nam, Corporate Governance is still newness with
Company manager. To apply the principles of corporate governance to management practical
is necessary. We need to have a research about effecting of factors form corporate governance
to firm performance in order to contribute some ideas and propose policies to make corporate
governance of our nation perfectly.
There are so many a numbers of topics and research on gender diversity affects the
performance of the company but only some study that have used the samples from
developing country as India ( Jackling & Johl 2009) and Malaysia (Marimuthu and
Kolamdaisamy 2009) and in Viet Nam have no study about woman in the boardroom and
firm performance. Moreover, most of developed countries already have advanced policies
regarding affirmative action in corporate governance that support woman representation in
the board. But in Viet Nam, we haven’t this policy yet. Therefore, this study is aimed to
add to the literature regarding the link between woman in the boardroom and firm
performance. It will also provide some suggestion about action policies in the developing
countries, specially is Viet Nam.
Additionally, World Bank (2010) have argued that a country can sustain its long-
term economic growth and prosperity, improve governance, and increase living
12
standards by employing more women and narrowing the employment gap between
men and women. This is an indication that women have been acknowledged as part of the
nation’s assets and must be empowered to achieve the national development goals.
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CHAPTER 2
THEORETICAL PERSPECTIVES, LITERATURE REVIEW AND STUDIES,
RESEARCH QUESTIONS AND HYPOTHESES
2.1 Introduction
This chapter presents the concepts and theoretical perspectives adopted for the
study. It includes the definitions of Banking, Board, Women in the boardroom and firm
performance, and the descriptions of the theories used to explain the relationships
between the two constructs Woman on the board and firm performance. Agency theory
and stewardship theory are used to define the relationships between gender diversity in
the composition of the board and firm financial performance. The theoretical framework is
presented in the last part of this chapter.
This chapter also reviews the previous research that has examined the link between
gender diversity of board members and firm performance. The reviews include the studies
conducted in the context of both developed and developing countries.
2.2 Board and Women in the boardroom
The board is an important part of the overall corporate governance mechanism within a
firm. As a body responsible for overall policy and strategic direction, the board essentially
drives the overall performance of the firm. As a consequence, board characteristics and
board composition that includes, for example, the number of independent boards, the
tenure of boards, the size of the board, as well as board diversity in terms of gender,
age, ethnicity, nationality, educational background, industrial experience and organizational
membership, may influence firm performance (Campbell & Vera 2008). For the current
study, it will be interesting to examine whether women in the boardroom enhances firm performance.
Board members can be divided into three categories:
* Chairman – Technically the leader of the corporation, the chairman of the board is
responsible for running the board smoothly and effectively. His or her duties typically include
maintaining strong communication with the chief executive officer and high-level executives,
formulating the company's business strategy, representing management and the board to the
general public and shareholders, and maintaining corporate integrity. A chairman is elected
from the board of governors.
* Inside Directors – These directors are responsible for approving high-level budgets
prepared by upper management, implementing and monitoring business strategy, and approving
core corporate initiatives and projects. Inside directors are either shareholders or high-level
management from within the company. Inside directors help provide internal perspectives for
other board members. These individuals are also referred to as executive directors if they are
part of company's management team.
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