The impact of agency cost on firm performance: a comparison between private and privatized firms listed on Vietnam stock market

Abstract

In Vietnam, there are many studies on agency cost, such as research of Thuy et al (2014), Tuan and Tuan (2013) and many others. Although most these studies are based on quality research and confirm the existence of agency cost in Vietnamese companies, they cannot estimate specifically the agency cost. This study is carried out to determine the impact of agency cost (proxies are asset turnover ratio and general and administrative expense ratio) on firm performance (proxy is TobinQ and ROE) of 100 companies listed on Vietnam stock market during the 9 year period from 2010 to 2018, and to figure out the difference of agency cost of privatized corporations (currently dominated by state ownership) and private corporations (only private ownership). The research is conducted by using the mixture of quantitative method, positivism philosophy and deductive approach. The research findings show that agency cost and state ownership impact on firm performance negatively and significantly, while growth opportunity and capital structure has a positive impact on firm performance. The study also demonstrates that agency cost of privatized corporations is higher and has more negative influence on firm performance than that of private corporations