The Relationship between the Board’s Characteristics, Ownership Structure, and the Probability of Delisting in Vietnam

Abstract

Delisting refers to the situation where a listed firm is disqualified because it is ineligible for transactions in the stock market. A delisting situation is bad news for investors; it not only impacts shareholders but is also a sanction imposed on managers. This paper aims to identify the determinants of delisting firms in Vietnam from a corporate governance perspective. A dataset comprising 370 firms was collected in the period from 2014 to 2021; 185 of these firms were delisted firms and the rest were matching firms. Our results show that firms with larger sizes, greater board activities, and a higher proportion of state and institutional ownership are generally less likely to be delisted. Notably, there is no empirical evidence to support the finding that board ownership, concentrated ownership, and foreign ownership impact the probability of delisting in the context of Vietnam. This study contributes to the literature by providing specific empirical evidence on the relationship of non-financial indicators, measured by the corporate governance characteristics, and the probability of delisting. Our findings may be considered an early warning signal for shareholders or investors to anticipate the probability of delisting, allowing them to make better decisions.