Examining How Business Group Affiliation and Governance Structures Shape Corporate Profitability: Evidence from Vietnam

Abstract

The research study conducted experimental research in an emerging economy to understand the relationship between corporate governance and performance with respect to business group affiliation. To achieve this, the author performed analysis on a sample of 190 companies listed on the HOSE stock exchange over a period of 5 years, from 2018 to 2022, using the GLS regression model. The empirical research found a negative relationship between corporate governance and performance in Vietnam, especially among companies affiliated with business groups. Overall, the findings indicated that board size and CEO duality have limited significance in influencing firm performance within these groups. However, the proportion of independent directors shows a significantly negative impact on performance in affiliated companies. Moreover, the effect of ownership concentration on performance differs when considering business group affiliation. By analyzing governance, operational efficiency, and their link to business groups, this study expands current knowledge by bridging research on business groups in emerging economies with corporate governance and firm performance research. Additionally, from the perspective of Sustainable Development Goals (SDGs)—in particular, SDG 8 (Decent Work and Economic Growth) and SDG 12 (Responsible Consumption and Production)—the findings underscore the necessity for robust corporate governance frameworks. Such frameworks not only enhance transparency and accountability but also foster sustainable resource utilization, stakeholder trust, and inclusive growth across business group networks