How Does Foreign Ownership Affect Firm Performance? The Mediating Role of Corporate Risk-Taking in Vietnamese Firms

Abstract

Manuscript type: Research paper
Research aims: This study examines the impact of foreign ownership on
firm performance through the mediating role of corporate risk-taking.
Design/Methodology/Approach: Based on data collected from 489
listed firms in Vietnam from 2017 to 2023, this study uses the maximum
likelihood estimation in Structural Equation Modeling (ML-SEM) to
examine the research relationship. Additionally, the study employs fuzzyset
Qualitative Comparative Analysis (fsQCA) to further strengthen the
initial test results.
Research findings: The findings indicate that foreign ownership has
a positive impact on firm performance through the mediating role of
corporate risk-taking. Moreover, the results from the fsQCA method
confirm that the combination of foreign ownership and corporate
risk-taking is a necessary and sufficient condition for enhancing firm
performance.
Theoretical contribution/Originality: Research using agency theory to
explain the relationship between foreign ownership and firm performance
through the role of corporate risk-taking.
Practitioner/Policy implications: This finding provides implications for
foreign investors and corporate managers in the context of Vietnam.
Research limitation: This study is limited in sample size because it focuses
on companies listed on the Vietnamese stock exchange, therefore the
results do not comprehensively cover the entire market.