Determinants of foreign ownership: Evidence from Vietnam listed firms

Cao Thi Hong Vinh, Nguyen Dam Khanh Linh, Vu Kim Dung

  • Cao Thi Hong Vinh
  • Nguyen Dam Khanh Linh
  • Vu Kim Dung
  • Tạp chí Kinh tế Đối ngoại


Abstract: Research regarding the determinants of foreign ownership in Vietnamese listed firms seems to be  more important as (i) foreign capital has made a great contribution to Vietnam and (ii) the country becomes more open for foreign investors with the issuance of Governmental Decree No. 60/2015 (permitting a higher rate of foreign ownership in domestic listed firms). Despite this fact, in our perception, there have been no comprehensive studies about these determinants. To bridge the gap, we study a sample for a period of 2013-2015 with 700 listed firms on two stock exchanges of HNX and HOSE of Vietnam with the application of Instrumental Variable methodology. Our findings show clear evidence about the significant impact of different determinants on foreign ownership percentage in Vietnamese listed firms. Firms with higher profitability, larger size, longer time to be listed on stock exchanges, less debt-equity ratio, less price volatility, but high return-volatility will be more attractive to foreign owners. Moreover, we also discover 10 attractive industries and other 5 unattractive ones for foreign investors during the period of 2013-2015.

Key-words: Foreign ownership, Listed firms, Stock exchange, Vietnam