I. Introduction1. Backgound of StudyCorporate’s risk-taking activities largely reflect the spirit of capitalism.
While the determinants and consequences of recent activities have been tested in the United States and other developed countries around the world (eg, Bargeron et al., 2010; Faccio et al., 2011. John et al, 2008. Li et al, 2013), but these issue is less noticeable in developing countries, so our paper will extend previous studies by studying the inter-relationships between gender diversity in the boardroom, state ownership and corporate risk-taking in Vietnam.Risk-taking is critical to the company’s success. Empirical evidence indicates that some firms are unlikely to fail without effective risk control, so few firms can expect to thrive without a certain level of risk.
Therefore, studying the factors that influence of risk-taking is a very important issue for the company.Viet Nam provides a particularly interesting setting to examine these issues in an emerging market. First, Vietnamese corporate represent a clear case of male domination in the board. Our preliminary statistics show that 47.
059% of the BOD are male in the sample. The average number of female members in the board is only 14.252%, and only two of the 1345 observations have all female directors on the firm’s board.Second, Vietnam is an example of an emerging market where government interference in corporate is still large.
State ownership has played a key role in the way corporations behave in Vietnam (53.755% of our sample is SOEs or state-owned enterprises as the largest share holder). These two aspects play an important role in corporate risk-taking is the main focus of our paper. In addition, the correlation of the three major variables in our study is particularly noteworthy that the equitization program was tested by Vietnam during 1990-1991 and has been officially implemented since 1992, was completed in 2010 (Sinh, 2012).Regarding the promulgation of policy mechanisms, in the period of 2011 – 2015, the government and the Prime Minister issued 69 decrees, resolutions, decisions and directives. There are 21 documents on the renovation of organization and management of SOEs; 34 documents on reorganizing, restructuring, equitization and divestment of state capital in enterprises; 14 Charter of organization and operation of economic groups and state corporations.
The Ministries issued 15 circulars guiding the implementation of mechanisms and policies. (Quang, 2016)Implementing the master plan on SOE reorganization and renewal already approved by the Prime Minister, ministries, branches, localities, economic groups and state corporations have arranged 591 enterprises the number of enterprises reached 96% of the plan); Of which, 499 enterprises and enterprises were equitized (96.3% of the plan), 48 enterprises were merged, merged, 17 companies were liquidated, 8 enterprises were sold, transformed into a limited liability company with eight members.Accordingly, SOEs have declined sharply in terms of quantity, especially small-scale enterprises, inefficient enterprises, enterprises in the fields where the State does not need to hold.By using a sample of 269 non-financial listed companies in Vietnam for the period 2011-2015, the study examined the relationship between gender diversity in the executive board, the influence of state ownership to accept the risk of the business.2. Purpose of ResearchOur study examines the inter-relationships between gender diversity in the boardroom and state ownership that influences corporate risk-taking. The article lists 269 companies listed on the Ho Chi Minh City Stock Exchange (HOSE) and the Hanoi Stock Exchange (HNX) for the 2011-2015 period, representing 11 companies in different fields.
The results indicate that risk-taking of Vietnamese companies generally increases when board of directors is male, accepting the risk of being mitigated only if the company has government ownership control. Positive relationships between corporate risk-taking and male domination in the board became more prominent after the government reduced its ownership control through equitization. The decline of firm risk-taking through state ownership tends to weaken after the equitization of state-owned enterprises.
Our results are robust to endogenous problems and highlight the benefits of gender diversity in reducing the behavior of companies that take excessive risks, especially with countries with relatively weaker overall investor protection.3. Research Objective and Develop hypothesesHypothesis 1: A Male-only is positive related to corporate risk-taking.
Hypothesis 2: State ownership is negatively related to the company accepting therisk2. Develop hypotheses2.1.
All board members are male and accept the risk of DNBehavioral behavioral evidence confirms the importance of gender differences in corporate decision-making (Adams and Ferrer, 2009; Gul et al., 2011; Huang and Kisgen, 2013; Liu et al. 2014). For example, Adams and Ferreira (2009) reported that female directors had better attendance records than men and were more likely to attend monitoring committees.
The market is also found to meet the negative to buy back made by male executives because of their tendency to carry out value-destroying acquisitions. A similar result was also reported for profit after debt issuance (Huang and Kisgen, 2013).The topic of gender diversity in the Board of Directors is beneficial to companies still in dispute, with empirical evidence mostly drawn from developed markets. Charter et al. (2003) reported that the positive relationship between gender diversity and corporate value may be due to a better understanding of the diverse market, as well as increased creativity and innovation when available. female members in the board.
Moreover, gender diversity is more likely to mend productivity when solving problems.On the other hand, Rose (2007) found a negative relationship between gender diversity and the performance of Danish companies, while Huse et al. (2009) did not find any particular link between the presence of women in the board and supervisory tasks, such as strategic control and budgeting.
The relationship between gender diversity and risk-taking companies has received limited attention in previous financial studies.We argue here that there are some channels that lead to the relationship between the two variables. Studying how culture influences risk-taking enterprises in 35 countries (developed and emerging), Li et al.
(2013) found that the risk increases (decreases) with cultures related to individualism (uncertainty avoidance).That is, some characteristics such as individualism and the risk of aversion can affect individual thinking and thus lead to differences in decision-making management (eg, decision to accept risk. ro) in the company.It is also a good judgment when it comes to finding that women are less personal and conservative to avoid uncertainty than men. Despite relatively limited financial discussions, the cultural relations theory implicitly recognizes that women excel in their role in relation to others (see, for example, Fletcher, 1999. Miller, 1986).
Specifically, female managers focus more on personal relationships and show more behavioral relationships than men (see, for example, Brock, 2008; Jogulu and Vijayasingham, 2015; Litwin, 2011; Morrison, 2009. ). Men are also more likely to be directed toward self-enhancing attributes (Miller and Ross, 1975) and have higher requirements for male tasks than women (Beyer and Bowden, 1997). All executives pointed out that women are relatively less individual than men.For uncertainty avoidance, female executives are considered more cautious in making important decisions (Huang and Kisgen, 2013; Levi et al., 2014). A female board member changes the motivation of the board of directors (Elstad and Ladegard, 2012).
Empirical evidence suggests that female directors are screening harder than men, and therefore are more proactive in joining the monitoring committees, or require a higher audit effort ( Adams and Ferreira, 2009; Gul et al., 2011). For example, Levi et al. (2014) shows that bidders with female executives made fewer acquisitions, and if they did, the auction fee was lower than male monopoly councils. In addition, businesses found by female CEOs have lower leverage than male CEOs (Faccio et al., 2011).According to Camerer and Lovallo (1999), over confidence will occur when a director is optimistic of his / her own predictions about future events or underestimate the future uncertainty of the company.Managers also tend to overestimate his / her ability to solve problems (Camerer and Lovallo, 1999) and / or underestimate thefirm resources as necessary (Shane and Stuart, 2002).
Lundeberg et al. (1994) concluded that women in general are less self-confident than men. The above leads us to make the first hypothesis:Hypothesis 1: The board of directors with full male members will have the same relationship to accept the risk of the business.2. state-owned and risk-taking enterprises in ChinaThe second major source of risk in our investigation is state ownership. Theory of managers generally assumes that corporate ownership structures influence the firm’s risk-taking behavior (Jensen and Meckling, 1976).
In the Vietnamese context, particularly interesting aspects are government ownership. Business activities of centrally-owned enterprises are often limited by political and social objectives, which may include maintenance of urban employment levels, direct control of industries sensitive industry, or politically motivated production (Clarke, 2003). To achieve steady returns, and thus serve the best interests of the government, state-controlled companies are less likely to promote risky projects (Boubakri et al., 2013b). As a result, state ownership is found to be negatively related to the company accepting risk (Boubakri et al., 2013b).
For these reasons, we speculate that;Hypothesis 2: State ownership is negatively related to the company accepting the risk3. Data and variables3.1. Describe the dataOur sample includes non-financial companies listed on the Shanghai or Shenzhen Stock Exchange during the 1999-2010 period.
We have afinal sample of 1,361 enterprises having 8903 observations of the company year, excluding observations lacking relevant financial information. Performance data was collected from the Chinese CSMAR stock market financial database, while ownership data was collected from CSMAR Chinese corporate governance research databases. listing.Figures A and B of Table 1 show the distribution of observations of each enterprise over the years and industry; 67.86% of the observations were of manufacturing companies, followed by 9.5% in public utilities, 8.85% in corporations, 8.45% in trade, and 5, 34% in real estate.
This distribution shows the need to adjust industrial processes. Table C shows that from 1999 to 2008, 39.17% of the samples were male-only, with 60.
83% having the rest of the gender mix.Table D shows that the percentage of male panels decreases only over time; from 40.71% in 1999 to 36.68% in 2008.Table E presents time trends of state control. State management is identified using a fake, equal to one if the largest shareholders are state agencies, state-owned enterprises (SOEs). In 1999, 66.96% of samplefirms were controlled by state agencies or state-owned enterprises, with rates falling to 57.
37% in 2008. Before the NTS reform, the state agencies The average control was 71.78% of the samplefirms in the period 1999-2004, but the average dropped to 61.45% in the subsequent period (2005-2008), after implementation of the NTS reforms. In line with this, Liao et al. (2014) also reported that state ownership in state-owned enterprises has been declining since the reform.
3.2. risk taking measuresAfter Boubakri et al.
(2013b); Faccio et al. (2011) andJohn et al. (2008), we use two proxy measures for corporate risktaking. Risk involves the volatility of a company’s ROA over a period of three years. For example, the risk tolerance for 2008 is calculated as the change in ROA from 2008 to 2010. ROA is defined as the ratio of operating profit to total assets. We use three-year windows to account for the volatility of ROAs as board members may reappoint on 3-year terms. Risk is the difference between maximum and minimum ROA over three years overlappingContribution of the topicOur main focus is on two main areas.
First, while previous studies have highlighted the importance of gender diversity in the Board of Management, which influences the improvement of corporate governance (Gul et al., 2011), and empirical evidence If the board has female members, it will be more active in monitoring (Adams and Ferreira, 2009) and cautious in making important decisions compared to the men’s board (Huang and Kisgen, 2013; Levi et al, 2014), some of the ongoing debate about promoting women to become board members will contribute to the success of larger companies. We provide new empirical evidence that the presence of female directors is beneficial in minimizing the risk of excessive risk taking that could harm companies, particularly in an emerging market.Secondly, the findings of this study provide important implications for policymakers.
Although the risk is proposed to have a positive impact on long-term sustainable development (Faccio et al., 2011), however, risk-taking in countries with weak investor protection Reveal the potential requisition (John et al., 2008). Vietnam is nearing the bottom of the WEF rankings for the 133/139 level of investor protection (the World Economic Forum (WEF) published its Global Competitiveness Report 2010-2011). In such an environment, state ownership may still be beneficial in reducing excessive risk. However, it is mentioned that marketization is evident and necessary for any emerging market in the industry. Competition with foreign capital inflows, marketers will slow down risk tolerance, but all men in the board will mourn the risk.
Interpersonal relationships emphasize the importance of further promoting gender diversity in the Board of Directors as an effort to improve the company’s performance, creating a sustainable development of the business. This evidence may be especially important for countries that generally protect relatively weak investors, such as Vietnam,Specifically, state-controlled enterprises are less willing to take risks. Our strength test also shows that the impact of male dominance in meeting rooms on too many risk-taking enterprises is significant infirms in the provinces with a higher level of marketization (meaning where they are more exposed to the market economy).Our research continues to show that the positive relationship between male board members and risk takers is more important after equitization. By analyzing the data samples, we found that prior to the NTS reform, men only showed significant influence on the risk-taking business (male aggression management may be restrained by home ownership water), but these companies are becoming increasingly risky after the NTS reform.
On the other hand, the reduction of corporate risk through state ownership tends to be dissipated after the NTS reform