Thesis Public Defense | VNP26 - Mạc Lệ An

Ownership structure and corporate default risk: Empirical evidence from Vietnam

Student: Mạc Lệ An, VNP26

Supervisor: Dr. Vũ Việt Quảng

Abstract:

 Vietnam has long been well recognized as a transition frontier country mainly characterized by the dominance of state and family ownership and control in most listed corporations across different sectors. From that sense, the study is inspired and motivated to investigate how the firm ownership structures should have an impact of on the corporate default risk, or default probability, in Vietnam. Using a sample panel data of 230 non-financial firms dataset of publicly traded corporations listed on the largest stock exchange in Vietnam for the sample period starting from the year 2012 to 2020, the preliminary study shows a negative relationship between institutional, foreign ownership and the probability of default, but a positive between state, family ownership, and corporate default risk. Interestingly, the findings reveal the non-linear relationship between state, family ownership, and the default probability. In particular, State ownership enhances risk-taking behavior as the firms are encouraged to borrow more debt when the state ownership exceeds a specific threshold, increasing corporate default probability. However, family ownership is negatively associated with a probability of corporate default for firms that have full family control over the firm, and then the risk is reduced.