The Impact of Foreign Ownership on Firm Performance: An Empirical Study of Listed Firms in Vietnam

The purpose of the research examines the relationship between foreign ownership and listed firms' performance in Vietnam. This study employs an extensive set of panel data comprising 288 non-financial listed Vietnamese firms, over a period from 2015 to 2019 taken for analysis. The results show that the higher the foreign ownership ratio, the higher the performance, however, the relationship between foreign ownership and firm's performance is U-shaped. In contrast, when the foreign ownership ratio is becoming too high, it will reduce the firm's performance and firm size, liquidity, financial leverage, capital intensity, and growth opportunities. Furthermore, we find that foreign ownership and performance are linked by an inverted U-shaped relationship. A firm's performance increases with greater foreign ownership up to the range of 36.26%, and declines thereafter. The paper also found positive effects of firm size and growth opportunities, and an inverse relationship between liquidity, financial leverage and capital intensity, and firm's performance. This study has several implications for the enhancement of information and understanding of the foreign ownership as it sheds light on the foreign ownership-firm's performance relationship. Moreover, the study findings contribute to the literature concerning the ownership structure in the context of developing countries.