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Ownership concentration, financial reporting quality and investment efficiency: an empirical analysis of Vietnamese listed firms

Ownership concentration, financial reporting quality and investment efficiency: an empirical... The purpose of this study is to investigate the relationships among financial reporting quality (FRQ), ownership concentration and investment efficiency (IE) of listed firms in Vietnam, an emerging market in Southeast Asia.Design/methodology/approachMultivariate regression models are estimated to test the impacts of FRQ, ownership concentration and the interaction effect of FRQ and ownership concentration on IE. Two-step system generalized method of moments (GMM) estimators are used to control for endogeneity.FindingsThe results show that ownership concentration is positively associated with the IE of Vietnamese listed firms. The results also reveal that overinvestment decreases when there is an increase in ownership concentration. In addition, the authors find that FRQ is positively associated with IE and negatively associated with overinvestment and underinvestment. Moreover, the impact of FRQ on overinvestment is weaker in firms with concentrated ownership.Originality/valueTo the best of the authors’ knowledge, this is the first study that attempts to investigate the influence of ownership concentration and the interaction effect of ownership concentration and FRQ on the IE of Vietnamese listed firms. The results provide some managerial implications for Vietnamese listed firms and policymakers on how to mitigate firm-level investment inefficiency. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Social Economics Emerald Publishing

Ownership concentration, financial reporting quality and investment efficiency: an empirical analysis of Vietnamese listed firms

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0306-8293
DOI
10.1108/ijse-03-2022-0200
Publisher site
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Abstract

The purpose of this study is to investigate the relationships among financial reporting quality (FRQ), ownership concentration and investment efficiency (IE) of listed firms in Vietnam, an emerging market in Southeast Asia.Design/methodology/approachMultivariate regression models are estimated to test the impacts of FRQ, ownership concentration and the interaction effect of FRQ and ownership concentration on IE. Two-step system generalized method of moments (GMM) estimators are used to control for endogeneity.FindingsThe results show that ownership concentration is positively associated with the IE of Vietnamese listed firms. The results also reveal that overinvestment decreases when there is an increase in ownership concentration. In addition, the authors find that FRQ is positively associated with IE and negatively associated with overinvestment and underinvestment. Moreover, the impact of FRQ on overinvestment is weaker in firms with concentrated ownership.Originality/valueTo the best of the authors’ knowledge, this is the first study that attempts to investigate the influence of ownership concentration and the interaction effect of ownership concentration and FRQ on the IE of Vietnamese listed firms. The results provide some managerial implications for Vietnamese listed firms and policymakers on how to mitigate firm-level investment inefficiency.

Journal

International Journal of Social Economics – Emerald Publishing

Published: Jan 2, 2023

Keywords: Financial reporting quality; Investment efficiency; Ownership concentration; Overinvestment; Underinvestment

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