The moderating effect of COVID-19 on ownership concentration - agency cost relationship: Case of Vietnamese listed real estate firms

Abstract

Purpose - The study examines the effects of uncertainty and its interaction with state ownership and other block holders on agency costs of Vietnamese listed construction and real estate firms. Design/methodology/approach - Panel data were collected from 122 listed firms in Vietnam’s construction and real estate sector from 2011 to 2022. Data analysis involved the application of fixed-effect (FE) and random-effect (RE) regression models. Findings - Our results suggest that COVID-19 positively correlates with firms’ agency costs. In addition, firms’ high level of state ownership seems to worsen agency problems during the pandemic period. However, other types of ownership (managerial, institutional, and individual ownership) might mitigate agency problems as their reductive effect on agency cost is strengthened during this period. Research limitations/implications - The overall results imply that private firms will react better to crises due to their quick adaptation ability. State-owned firms’ managers should pay extra attention and formulate contingency plans to counter the complicated bureaucratic structure of State regulation to adapt to the crisis quickly. Regulators and policymakers from developing economies should focus on creating a more transparent system, specifically on how firms should react during times of instability. Originality/value - Our study investigates the impact of COVID-19 on a firm’s agency costs and how it interacts with different forms of ownership.