The Effects Of Foreign Ownership On Corporate Risk: Findings From Quantile Regression And FSQCA
DOI:
https://doi.org/10.33736/ijbs.7618.2024Keywords:
foreign ownership, corporate risk, quantile regression, fuzzy-set Qualitative Comparative Analysis (fsQCA)Abstract
The study investigates the correlation between foreign ownership and corporate risk at 147 listed firms in Vietnam from 2015 to 2019. Quantile regression and fuzzy-set Qualitative Comparative Analysis (fsQCA) technique method are applied to examine this relationship. Although the findings reveal that foreign ownership has an impact on corporate risk, the direction of this impact varies depending on the specific conditions. These empirical results have significant implications for firms in managing risks through effective policies related to foreign ownership. The findings will also enable foreign investors to assess the risk level of their investments when analyzing the current situation of a given firm, thereby adjusting their investment capital appropriately.
References
Alp, O. S., Canbaloglu, B., & Gurgun, G. (2022). Stock liquidity, stock price crash risk, and foreign ownership. Borsa Istanbul Review, 22(3), 477-486. doi.org/10.1016/j.bir.2021.06.012. Batten, J. A., & Vo, X. V. (2015). Foreign ownership in emerging stock markets. Journal of Multinational Financial Management, 32, 15-24. doi.org/10.1016/j.mulfin.2015.05.001.
https://doi.org/10.1016/j.bir.2021.06.012
Bjuggren, P-O., Eklund, J. E., and Wiberg, D. (2007). Ownership structure, control and firm performance: the effects of vote-differentiated shares. Applied Financial Economics, 17(16), 1323-1334. doi.org/10.1080/09603100600993737.
https://doi.org/10.1080/09603100600993737
Boshnak, H.A. (2023). Ownership structure and firm performance: evidence from Saudi Arabia. Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. doi.org/10.1108/JFRA-11-2022-0422. Budig, M. J., & Hodges, M. J. (2010). Differences in disadvantage: Variation in the motherhood penalty across white women's earnings distribution. American Sociological Review, 75(5), 705-728. doi.org/10.1177/0003122410381593. Chari, A., Chen, W., & Dominguez, K. M. (2012). Foreign ownership and firm performance: Emerging market acquisitions in the United States. IMF Economic Review, 60(1), 1-42. doi.org/10.1057/imfer.2012.1. Ciftci, I., Tatoglu, E., Wood, G., Demirbag, M., & Zaim, S. (2019). Corporate governance and firm performance in emerging markets: Evidence from Turkey. International Business Review, 28(1), 90-103. doi.org/10.1016/j.ibusrev.2018.08.004. Conyon, M. J., & He, L. (2017). Firm performance and boardroom gender diversity: A quantile regression approach. Journal of Business Research, 79, 198-211. doi.org/10.1016/j.jbusres.2017.02.006.
Desender, K. A., Aguilera, R. V., Lópezpuertas‐Lamy, M., & Crespi, R. (2016). A clash of governance logics: Foreign ownership and board monitoring. Strategic management journal, 37(2), 349-369. doi.org/10.1002/smj.2344. Douma, S., George, R., & Kabir, R. (2006). Foreign and domestic ownership, business groups, and firm performance: Evidence from a large emerging market. Strategic Management Journal, 27(7), 637-657. doi.org/10.1002/smj.535.
https://doi.org/10.1002/smj.2344
Drucker, P. (1986). A crisis of capitalism. Wall Street Journal, 30, 30-31.
Du, Y.Z.; Li, J.X.; Liu, Q.C.; Zhao, S.T.; Chen, K.W (2021). Configurational theory and QCA method from a complex dynamic perspective: Research progress and future directions. Management World, 2021, 37(3), 180-197+12-13. https://doi.org/10.19744/j. cnki.11-1235/f.2021.0042
ElBannan, M. A. (2015). Do consolidation and foreign ownership affect bank risk taking in an emerging economy? An empirical investigation. Managerial Finance, 41(9), 874-907. dx.doi.org/10.1108/MF-12-2013-0342.
https://doi.org/10.1108/MF-12-2013-0342
Ferris, S. P., & Park, K. (2005). Foreign ownership and firm value: Evidence from Japan. Corporate governance, 11, 1-29. doi.org/10.1016/S1569-3732(04)11001-3.
https://doi.org/10.1016/S1569-3732(04)11001-3
Fiss, P. C. (2007). A set-theoretic approach to organizational configurations. Academy of Management Review, 32(4), 1180-1198. doi.org/10.5465/amr.2007.26586092.
https://doi.org/10.5465/amr.2007.26586092
Fiss, P.C. (2011). Building better causal theories: A fuzzy set approach to typologies in organization research. Academy of Management Journal, 54(2), 393-420. doi.org/10.5465/AMJ.2011.60263120
https://doi.org/10.5465/amj.2011.60263120
Goulard, S. (2020). The impact of the US-China trade war on European Union. Global Journal of Emerging Market Economies, 12(1), 56-68. doi.org/10.1177/0974910119896642
https://doi.org/10.1177/0974910119896642
Hiles, A. (2012). Enterprise risk management. The definitive handbook of business continuity management, 1-21. doi.org/10.1002/9781119205883.ch1.
https://doi.org/10.1002/9781119205883.ch1
Huang, G., An, Z., and Li, D. (2022). Foreign institutional ownership and corporate risk-taking: International evidence. Corporate Governance: An International Review, 31(2), 260-284. doi.org/10.1111/corg.12456.
https://doi.org/10.1111/corg.12456
Huang, Z-X., Tang, Q., Huang, S. (2020). Foreign investors and stock price crash risk: Evidence from China. Economic Analysis and Policy, 68, 210-223. doi.org/10.1016/j.eap.2020.09.016.
https://doi.org/10.1016/j.eap.2020.09.016
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American economic review, 76(2), 323-329.https://www.jstor.org/stable/1818789
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360. doi.org/10.1016/0304-405X(76)90026-X . John, K., Litov, L., Yeung, B. (2008). Corporate governance and risk-taking. The Journal of Finance, 63 (4), 1679-1728. doi.org/10.1111/j.1540-6261.2008.01372.x.
https://doi.org/10.1016/0304-405X(76)90026-X
Kabir, M. N., Miah, M. D., Ali, S., Sharma, P. (2020). Institutional and foreign ownership vis-à-vis default risk: Evidence from Japanese firms. International Review of Economics & Finance, 69, 469-493. doi.org/10.1016/j.iref.2020.05.020.
https://doi.org/10.1016/j.iref.2020.05.020
Kao, M.-F., Hodgkinson, L. and Jaafar, A. (2019). Ownership structure, board of directors and firm performance: evidence from Taiwan. Corporate Governance, 19(1), 189-216. doi.org/10.1108/CG-04-2018-0144.
https://doi.org/10.1108/CG-04-2018-0144
Kim, B. (2011). Do Foreign Investors Encourage Value-Enhancing Corporate Risk Taking? Emerging Markets Finance and Trade, 47(3), 88-110. doi.org/10.2753/REE1540-496X470305.
https://doi.org/10.2753/REE1540-496X470305
Koenker, R. (2009). quantreg: Quantile regression. http://CRAN. R-project. org/package= quantreg.
Koenker, R., & Hallock, K. F. (2001). Quantile regression. Journal of Economic Perspectives, 15(4), 143-156. doi.org/10.1257/jep.15.4.143. Lassoued, N., Sassi, H., & Attia, M. B. R. (2016). The impact of state and foreign ownership on banking risk: Evidence from the MENA countries. Research in International Business and Finance, 36, 167-178. doi.org/10.1016/j.ribaf.2015.09.014.
Le T.M. Hanh, Ting, I. W. K., Kweh, Q. L., & Hoanh, L. T. H. (2018). Board meeting frequency and financial performance: A case of listed firms in Vietnam. International Journal of Business and Society, 19(2), 464-472.
Le, T. D. Q. (2021). Can foreign ownership reduce bank risk? Evidence from Vietnam. Review of Economic Analysis forthcoming, 13, 1-24. doi.org/10.2139/ssrn.3878912. Lemieux, T. (2006). Postsecondary education and increasing wage inequality. American Economic Review, 96(2), 195-199. doi.org/10.1257/000282806777211667. Li, M. (2015). Moving beyond the linear regression model: advantages of the quantile regression model. Journal of management, 41(1), 71-98. doi.org/10.1177/0149206314551963.
Lin, K. J., Lu, X., Zhang, J., & Zheng, Y. (2020). State-owned enterprises in China: A review of 40 years of research and practice. China Journal of Accounting Research, 13(1), 31-55. doi.org/10.1016/j.cjar.2019.12.001
https://doi.org/10.1016/j.cjar.2019.12.001
Mackie, J. I. (1965). Causes and conditions. American Philosophical Quarterly, 2(4), 245-264. https://www.jstor.org/stable/20009173.
Mai, N. (2019). Vietnam attracts FDI: New milestone 2019 and forecast for 2020. Vietnam Government Portal News, No. 12/2019. https://baochinhphu.vn/viet-nam-thu-hut-fdi-cot-moc-moi-2019-va-du-bao-2020-102266161.htm
Majcen, B., Radosevic, S., & Rojec, M. (2009). Nature and determinants of productivity growth of foreign subsidiaries in Central and East European countries. Economic Systems, 33(2), 168-184. doi.org/10.1016/j.ecosys.2009.03.003.
https://doi.org/10.1016/j.ecosys.2009.03.003
Mikkelson, W. H., & Ruback, R. S. (1991). Targeted repurchases and common stock returns. The RAND Journal of Economics, 22(4), 544-561. doi.org/10.2307/2600988.
https://doi.org/10.2307/2600988
Nguyen, P. (2012). The impact of foreign investors on the risk-taking of Japanese firms. Journal of the Japanese and International Economies, 26(2), 233-248. doi.org/10.1016/j.jjie.2012.03.001.
https://doi.org/10.1016/j.jjie.2012.03.001
Orlitzky, M., and Benjamin, J.D. (2001). Corporate social performance and firm risk: A meta-analytic review. Business and Society, 40(4), 369-396. doi.org/10.1177/000765030104000402. Park, J., & Yoon, S. J. (2017). The effect of foreign investors on investment sensitivity, risk taking and firm value. The Korean Journal of Financial Management, 34(3), 91-124. doi.org/10.22510/kjofm.2017.34.3.004.
https://doi.org/10.1177/000765030104000402
Phung, D. N., & Mishra, A. V. (2016). Ownership structure and firm performance: Evidence from Vietnamese listed firms. Australian Economic Papers, 55(1), 63-98. doi.org/10.1111/1467-8454.12056.
https://doi.org/10.1111/1467-8454.12056
Ragin, C. C (2008). Redesigning Social Inquiry: Fuzzy Sets and Beyond. University of Chicago Press.
https://doi.org/10.7208/chicago/9780226702797.001.0001
Rashid, M.M. (2020). Ownership structure and firm performance: the mediating role of board characteristics. Corporate Governance, 20(4), 719-737. doi.org/10.1108/CG-02-2019-0056.
https://doi.org/10.1108/CG-02-2019-0056
Rihoux, B., and Ragin, C. C. (2009). Configurational Comparative Methods: Qualitative Comparative Analysis (QCA) And Related Techniques. London: Sage Publications Lda.
https://doi.org/10.4135/9781452226569
Rokhim, R., and Susanto, A. P. (2011). The Increase of Foreign Ownership and its Impact to the Performance, Competition & Risk in Indonesian Banking Industry. Available at SSRN: https://ssrn.com/abstract=1915234 or doi.org/10.2139/ssrn.1915234 Satar, M.S., Rather, R.A., Cheema, S., Parrey, S.H., Ghaderi, Z. and Cain, L. (2024). Transforming destination-based customer engagement to revisit intention through co-creation: findings from SEM and fsQCA. Tourism Review, 79(3), 601-621. doi.org/10.1108/TR-10-2022-0489
https://doi.org/10.2139/ssrn.1915234
Schwert, G. W. (1989). Why does stock market volatility change over time? Journal of Finance, 44(5), 1115-1154. doi.org/10.1111/j.15406261.1989.tb02647.x. Tang, R. W., & Buckley, P. J. (2020). Host country risk and foreign ownership strategy: Meta-analysis and theory on the moderating role of home country institutions. International Business Review, 29(4), 101666. doi.org/10.1016/j.ibusrev.2020.101666.
https://doi.org/10.1016/j.ibusrev.2020.101666
Vietnamese Goverment Journal (2023). Policy Consultation. https://baochinhphu.vn/viet-nam-da-thu-hut-duoc-gan-4387-ty-usd-von-dau-tu-nuoc-ngoai-trong-35-nam-qua 102231228141549066.htm Vo, X. V. (2015). Foreign ownership and stock return volatility-Evidence from Vietnam. Journal of Multinational Financial Management, 30, 101-109. doi.org/10.1016/j.mulfin.2015.03.004.
https://doi.org/10.1016/j.mulfin.2015.03.004
Vo, X. V. (2016). Foreign investors and corporate risk taking behavior in an emerging market. Finance Research Letter, 18, 273-277. doi.org/10.1016/j.frl.2016.04.027. Vo, X. V. (2016). Foreign ownership and stock market liquidity-evidence from Vietnam. Afro-Asian Journal of Finance and Accounting, 6(1), 1-11. doi.org/10.1504/AAJFA.2016.074540.
https://doi.org/10.1016/j.frl.2016.04.027
Wang, J., Ma, X., Zhao, Y., Zhao, J., & Heydari, M. (2022). Impact of scientific and technological innovation policies on innovation efficiency of high-technology industrial parks - A dual analysis with linear regression and QCA. International Journal of Innovation Studies, 6(2022), 169-182. doi.org/10.1016/j.ijis.2022.06.001
https://doi.org/10.1016/j.ijis.2022.06.001
Wing Kwong, C., & Ei Yet, C. (2023). The impact of corporate governance mechanisms and owership structure on capital structure on capital structure of Chinese dual-listed companies. International Journal of Business and Society, 24(3), 995-1014. doi.org/10.33736/ijbs.6394.2023
https://doi.org/10.33736/ijbs.6394.2023
Woodside, A.G. (2012). Proposing a new logic for data analysis in marketing and consumer behavior: Case study research of large-N survey data for estimating algorithms that accurately profile X (extremely high-use) consumers. Journal of Global Scholars of Marketing Science: Bridging Asia and the World, 22(4), 277-289. doi.org/10.1080/21639159.2012.717369 Woodside, A. G. (2013). Moving beyond multiple regression analysis to algorithms: Calling for adoption of a paradigm shift from symmetric to asymmetric thinking in data analysis and crafting theory. Journal of Business Research, 66(4), 463-472. doi.org/10.1016/j.jbusres.2012.12.021.
https://doi.org/10.1080/21639159.2012.717369
World Bank (2023). Vietnam Economic Update - October 2023. https://documents1.worldbank.org/curated/en/099828111212365979/pdf/IDU0aa73a6f5007360424a0bd81083bb63a0ef02.pdf.
Xia J, Zhang L, Song Y (2024) The impact of environmental regulatory instruments on agribusiness technology innovation - A study of configuration effects based on fsQCA. PLoSONE 19(1): e0294662. doi.org/10.1371/journal.pone.0294662 Yen, D. T. H., & Wang, D. H. M. (2022). Foreign Ownership and Corporate Governance on Firm Risk in ASEAN Countries: In the Context of the US-China Trade War. In Conference on Contemporary Economic Issues in Asian Countries (pp. 497-510). Singapore: Springer Nature Singapore.
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2024 UNIMAS Publisher
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.
Copyright Transfer Statement for Journal
1) In signing this statement, the author(s) grant UNIMAS Publisher an exclusive license to publish their original research papers. The author(s) also grant UNIMAS Publisher permission to reproduce, recreate, translate, extract or summarize, and to distribute and display in any forms, formats, and media. The author(s) can reuse their papers in their future printed work without first requiring permission from UNIMAS Publisher, provided that the author(s) acknowledge and reference publication in the Journal.
2) For open access articles, the author(s) agree that their articles published under UNIMAS Publisher are distributed under the terms of the CC-BY-NC-SA (Creative Commons Attribution-Non Commercial-Share Alike 4.0 International License) which permits unrestricted use, distribution, and reproduction in any medium, for non-commercial purposes, provided the original work of the author(s) is properly cited.
3) For subscription articles, the author(s) agree that UNIMAS Publisher holds copyright, or an exclusive license to publish. Readers or users may view, download, print, and copy the content, for academic purposes, subject to the following conditions of use: (a) any reuse of materials is subject to permission from UNIMAS Publisher; (b) archived materials may only be used for academic research; (c) archived materials may not be used for commercial purposes, which include but not limited to monetary compensation by means of sale, resale, license, transfer of copyright, loan, etc.; and (d) archived materials may not be re-published in any part, either in print or online.
4) The author(s) is/are responsible to ensure his or her or their submitted work is original and does not infringe any existing copyright, trademark, patent, statutory right, or propriety right of others. Corresponding author(s) has (have) obtained permission from all co-authors prior to submission to the journal. Upon submission of the manuscript, the author(s) agree that no similar work has been or will be submitted or published elsewhere in any language. If submitted manuscript includes materials from others, the authors have obtained the permission from the copyright owners.
5) In signing this statement, the author(s) declare(s) that the researches in which they have conducted are in compliance with the current laws of the respective country and UNIMAS Journal Publication Ethics Policy. Any experimentation or research involving human or the use of animal samples must obtain approval from Human or Animal Ethics Committee in their respective institutions. The author(s) agree and understand that UNIMAS Publisher is not responsible for any compensational claims or failure caused by the author(s) in fulfilling the above-mentioned requirements. The author(s) must accept the responsibility for releasing their materials upon request by Chief Editor or UNIMAS Publisher.
6) The author(s) should have participated sufficiently in the work and ensured the appropriateness of the content of the article. The author(s) should also agree that he or she has no commercial attachments (e.g. patent or license arrangement, equity interest, consultancies, etc.) that might pose any conflict of interest with the submitted manuscript. The author(s) also agree to make any relevant materials and data available upon request by the editor or UNIMAS Publisher.
