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JEL Classification System

G32, G33, G34

Abstract

This study investigates the impact of ownership structure and board characteristics on corporate financial distress in Vietnam, an emerging market characterized by underdeveloped institutional frameworks, concentrated ownership structures, and a sharp rise in foreign investor participation. Based on panel data from 288 non-financial listed firms over the period 2017– 2024, the baseline results indicate that institutional ownership and board size are positively associated with firms’ financial health, whereas foreign ownership and ownership concentration are associated with a higher likelihood of financial distress. Additional robustness and endogeneity analyses generally support the baseline findings. However, some relationships appear sensitive to model specification and the measurement of financial distress. Unlike prior studies in developed markets that often highlight the beneficial role of foreign investors and large shareholders, the findings suggest that governance mechanisms may operate differently in emerging markets characterized by concentrated ownership structures and weaker institutional environments. These findings offer important implications for refining corporate governance expectations and policymaking in an emerging market context.

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