Foreign ownership and firm performance case of vietnam

Findings – The empirical results show a significant correlation between foreign ownership and firm performance, measured by Tobin’s Q.. The regressions on each level of foreign ownershi

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NGUYỄN THỊ THANH TÂM

FOREIGN OWNERSHIP AND FIRM PERFORMANCE: CASE OF VIETNAM

MAJOR: BUSINESS ADMINISTRATION

MAJOR CODE: 60.34.05

MASTER THESIS SUPERVISOR: Dr VÕ XUÂN VINH

HO CHI MINH CITY, 2012

I am grateful to the Examination Committee (Professor Nguyễn Đông Phong, Dr Nguyễn Trọng Hoài, Dr Nguyễn Đình Thọ, Dr Nguyễn Văn Ngãi, and Dr Nguyễn Thị Mai Trang) for their valuable advices to make

my thesis improved

I would like to thank my professors at Faculty of Business Administration and Postgraduate Faculty, University of Economics Ho Chi Minh City for their teaching, guidance and support during my MBA course

I owe my sincere thanks to my classmates for their encouragement and a special thank of mine goes to my class monitor, Bùi Hồng Thu, for his great assistance in collecting data for this thesis and for his guidance in econometrics respects

I wish to thank my family for their unconditional support and encouragement during my MBA course

ABSTRACT

Purpose – The thesis aims to investigate the relationship between foreign

ownership and firm performance on a selective sample of firms listed on Hochiminh Stock Exchange for period 2007-2010

Methodology – The thesis applies the Ordinary Least Squares method to

run multiple regressions on the whole sample and on each level of foreign ownership in order to give a closer view at the relationship between foreign ownership and firm performance

Findings – The empirical results show a significant correlation between

foreign ownership and firm performance, measured by Tobin’s Q The regressions on each level of foreign ownership indicate that foreign ownership was found to be significantly positive correlated with Tobin’s

Q when foreigners own between 5% and 20% of shares in firms, while a negative correlation occurs where foreign holdings are more than 20%, specially considerably negative where the level is more than 40%; and there is no significant relationship between the two variables where foreigners own less than 5% of shares

Originality/Value – The thesis tries to analyze how foreign ownership

affects firm performance and suggests that Vietnamese business owners should take a scrutiny on benefits and costs of foreign investment

Key words – Foreign ownership, firm performance

TABLE OF CONTENTS

ACKNOWLEDGEMENT i

ABSTRACT ii

LIST OF TABLES iv

LIST OF FIGURES v

ABBREVIATIONS vi

1 INTRODUCTION 1

1.1 Background 1

1.2 Purpose 3

1.3 Scope 4

1.4 Research questions 5

1.5 Structure 5

2 LITERATURE REVIEW 6

3 METHODOLOGY 16

3.1 Data 16

3.2 The model 16

3.3 Statistical Method 22

4 DATA ANALYSIS 23

4.1 Descriptive Statistics 23

4.2 Correlations 25

4.3 Regression Results 26

5 CONCLUSION 37

REFERENCES 39

APPENDICES 43

LIST OF TABLES

Table 4.1 Descriptive Statistics 23

Table 4.2 Correlation matrix 25

Table 4.3 Ordinary Least Squares Regression Results 27

LIST OF FIGURES

Figure 1.1 FDI contributions for the period 2006- 2011 2

Figure 1.2 FDI registered and implemented capital for the period

2006-2011 3

ABBREVIATIONS

debt_asset Financial Leverage

foreing_own Foreign Ownership

1 INTRODUCTION

1.1 Background

The relationship between ownership structure and firm performance has been examined since decades Some researches shows no effect of ownership structure on firm performance, while others indicate there is a correlation between these two factors

Demsetz (1983) argues that there should be no relationship between ownership structure and firm performance Pursuing this argument empirically, Demsetz and Lehn (1985) find no significant correlation between profit rates and various measures of ownership concentration in

a sample of 511 United States companies using 1980 data Himmelberg

et al (1999) extend the Demsetz and Lehn (1985) study by adding new

variables to explain the variation in the ownership structure Ownership structure is measured by shareholdings of insiders (officers plus directors) Firm performance measure is Tobin’s Q They employ the capital-to sales, R&D-to-sales, advertising-to-sales, and operating income-to-sales ratios as instrumental variables Controlling for these variables and fixed firm effects, they find that changes in ownership holdings have no significant impact on performance Demsetz and Villalonga (2001) continue to examine the ownership-performance relation by treating ownership structure as an endogenous variable and as

an amalgam of shareholdings owned by persons with different interests

By estimating a two-equation model for United States firms, their evidence shows that performance (defined as Tobin’s Q or the accounting profit rate) is not found to be influenced by ownership (defined as

managerial ownership (Chief Executive Officers, board of directors, top management) or ownership by the five largest shareholders)

Despite the fact that Demsetz and Lehn (1985), Himmelberg et al (1999), and Demsetz and Villalonga (2001) find no significant correlation between ownership structure and firm performance, series of subsequent researches, which had been done and built on the Demsetz heritage, prove

the converse results For instance, Andersson et al (2004) find that

dispersed ownership is associated with worse performance when examining firms listed on Sweden Stock Exchange A significant negative relationship is also found by Lee and Chuang (2009) when investigating the relation between insiders and corporate performance of

Taiwanese firms In line with this, Fishman et al (2005) find that

managerial ownership impacts negatively on performance This is opposite to the findings reported by Drakos and Bekiris (2010), where managerial ownership is found to be significantly positive correlated with Tobin’s Q

Figure 1.1 FDI contributions for the period 2006-2011

(Source: Foreign Investment Department, Ministry of Planning and Investment)

Figure 1.2 FDI registered and implemented capital for the period 2006-2011

(Source: Foreign Investment Department, Ministry of Planning and Investment)

As a part of ownership structure, foreign ownership plays an important role In Vietnam, foreign investments contribute considerably to Vietnam economy

Figure 1.1 and Figure 1.2 indicate that FDI implemented capital continuously increases during the period 2006-2011 FDI implemented capital in 2011 reaches 11 billion USD, which contributes 26% to the national investments and 19% to GDP Companies with foreign capital participation are a form of FDI Foreign investors bring to the receiving companies some benefits, such as solid financial sources, modern technology, and management skills To some extent, foreign ownership should have impact on firm performance

1.2 Purpose

The relation between ownership structure and firm performance remains controversial in numerous studies in diverse economies For instance,

Demsetz (1983), Demsetz and Lehn (1985), McConnell and Servaes (1990), Himmelberg et al (1999), and Demsetz and Villalonga (2001)

conduct survey in United States of America; Mudambi and Nicosia (1998) and Dinga et al (2009) study the case of United Kingdom; the

studies of Welch (2003) and Fishman et al (2005) are based on Australia

data; Kuznetsov and Muravyev (2001) examine the performance relationship in Russia; and other empirical analysis are reported by Andersson et al (2004) and Bandick (2005) in Sweden, Al-

ownership-Shiab and Abu-Tapanjeh (2005) in Jordan, by Aydin et al (2007) in

Turkey, by Kapopoulos and Lazaretou (2007) in Greek, by Lee and Chuang (2009) in Taiwan, by Hu and Zhou (2006) and Hess et al (2010)

in China, by Drakos and Bekiris (2010) in Egypt, by Priya and Shanmughan (2011) in India, by Gelubcke (2011) in Germany, and by Pervan et al (2012) in Croatia

Nonetheless, there have been, to the best of my knowledge, very few studies on the topic of foreign ownership and firm performance relation

in Vietnam The purpose of this study is to examine whether there exists a relationship between foreign ownership and corporate performance of the companies listed on HoSE and to explore how foreign ownership affects firm performance

1.3 Scope

The present thesis employs a selected sample of the companies listed on HoSE for the period 2007-2010

The thesis is limited to examine the impact of foreign ownership on firm performance without taking into account the relation between the origin

of foreign investors and firm performance

The thesis does not examine the relationship between firm performance and foreign investors who hold managerial positions in the companies

explain the variation in ownership structure

Himmelberg et al (1999) find that managerial ownership and firm

performance measured by Tobin’s Q are endogenously determined by firm specific factors and key variables in the firm’s contracting environment Controlling both for observed firm characteristics and firm fixed effects, they conclude that managerial ownership does not affect firm performance However, examining the endogeneity of ownership structure by using instrumental variables, they find a quadratic relationship between ownership and performance Himmelberg et al

(1999) conclude that previous works are unable to examine the observable heterogeneity, and hence any relationship detected might result from spurious correlations

non-Demsetz and Villalonga (2001) investigate the link of ownership structure and corporate performance, but in a new way, where ownership

is made multi-dimensional and treated as an endogenous variable Conducting both OLS regression analysis and 2SLS test, over a sample of

223 firms quoted in the Fortune 500 list, for the time-period 1976-1980, they affirm that there was no significant relation between ownership structure and firm performance

Applying and developing the models by Demsetz and Villalonga (2001), Welch (2003) examine the connection of ownership structure with firm performance, on a sample of 114 public companies listed on the Australian Stock Exchange, for the time-period 1999-2000 The OLS results show that ownership is significant in explaining performance However, when endogeneity is taken into account, the 2SLS regression provides no statistical dependence of ownership on performance Additionally, the results from a generalized nonlinear model illustrate limited evidence of a nonlinear relationship between managerial share ownership and firm performance

The similar results are found in the study of Klungland and Sunde (2009),

on a large sample of quarterly data from non-financial Norwegian companies listed on the Oslo Stock Exchange in the period 2001-2007 Using OLS analysis, Klungland and Sunde (2009) find a significant negative relation between ownership concentration and firm performance, measured by Tobin’s Q Nevertheless, when controlling for fixed firm effects, there is no significant relationship Using the method of

instrument variables (2SLS) to account for endogeneity of ownership structure, Klungland and Sunde (2009) find that the choice of instrument highly affects the significance of the results Since the results obtained from using instrument variables are questionably driven by weak instruments, Klungland and Sunde (2009) cannot conclude (econometrically) that ownership concentration influences firm performance

Mihai (2012) employs linear regression analysis to investigate whether the foreign equity is associated with better performance in the case of 63 listed Romanian companies on the Bucharest Stock Exchange The outcome of the study suggests that there is no significant link between firm performance and the existence of foreign capital

In contrast to the above-mentioned studies, various empirical analyses prove the reverse, for instance, Forsyth and Dwyer (1968), McConnell and Servaes (1990), Cho (1998), Mudambi and Nicosia (1998), Aitken and Harrison (1999), Wan (1999), Kuznetsov and Muravyev (2001), Park (2001), Andersson et al (2004), Grant and Kirchmaier (2004), Jiang

(2004), Al-Shiab and Abu-Tapanjeh (2005), Fishman et al (2005), Hu

and Zhou (2006), Lisboa and Esperanca (2006), Alonso-Bonis and Andrés-Alonso (2007), Aydin et al (2007), Farooque et al (2007),

Kapopoulos and Lazaretou (2007), Szép (2007), Yasar and Paul (2007), Hake (2008), Laurenceson and Qin (2008), Lee (2008), Abidin et al

(2009), Bilyk (2009), Burker et al (2009), Cornett et al (2009), Dinga et

al (2009), Ghahroudi (2009), Lee and Chuang (2009), Drakos and Bekiris

(2010), Hess et al (2010), Gelubcke (2011), Priya and Shanmughan

(2011), and Pervan et al (2012)

McConnell and Servaes (1990) investigate the relation between Tobin’s

Q and the structure of equity ownership for a sample of 1,173 firms for

1976, and 1,093 firms for 1986 They find a significant curvilinear relation between Q and the fraction of common stock owned by corporate insiders They also found a significant positive relation between Q and the fraction of shares owned by institutional investors

Cho (1998) uses a cross section of 326 manufacturing firms on Fortune

500 in 1991, and finds a significant relation between insider ownership and corporate value, where corporate is measured by Tobin’s Q He also finds a similar non-monotonic relation between insider ownership and investment Therefore, based on OLS analysis, ownership structure affects investment and corporate value However, when he estimates a simultaneous equations system of ownership structure, investment, and corporate value, the results show that investments affect firm performance, which in turn affects ownership structure, but not vice versa

The study of Andersson et al (2004) on 87 Sweden companies indicates

that companies with a dispersed ownership structure are associated with worse performance regarding stock return, ROA, and ROE, but are highly valued relating to Tobin’s Q The similar findings from Kapopoulos and Lazaretou (2007), who follow the model of Demsetz and Villalonga (2001) to conduct a research on a sample of 175 Greek firms By

comparing OLS estimates to 2SLS estimates, empirical findings indicate that there exists a linear positive relationship between firm performance and ownership structure Specifically, the study reveals that managerial shareholdings and important shareholdings positively influence Tobin’s Q; and that higher firm profitability required a less diffused ownership These findings were contradictory to Demsetz (1983)’s arguments: As the number of shareholders increases, the wealth of each will depend less

on the success of the firm But this carries no implication of a resulting reduction in the value of the firm Indeed, profit maximization may require a diffuse ownership structure (Demsetz (1983), p.386) Recently, Pervan et al (2012) support these arguments of Demsetz (1983) when

analyzing the relationship between firm performance (ROA) and firm ownership (ownership concentration and type) on a sample of 1430 listed Croatian firms for the period 2003-2010 Their empirical findings indicate that ownership concentration is negatively related with performance, for instance, firms with dispersed ownership perform better than firms with concentrated ownership In addition, they find that foreign controlled firms achieve higher level of profitability than domestically controlled firms

Another view on the impact of ownership structure on firm performance from Fishman et al (2005), who examine this relationship by using data

of 50 companies listed on Australian Stock Exchange over the period 2002-2003, based on the models by Demsetz and Villalonga (2001) and Welch (2003) in Australian environment The OLS results illustrate that

no relationship between ownership structure and Tobin’s Q exists, while the 2SLS results indicate that Tobin’s Q has a significantly negative

impact on the level of managerial ownership To further investigate this relationship, a three-equation model is developed and the findings indicate that managerial ownership impacts negatively on firm performance Al-Shiab and Abu-Tapanjeh (2005) have the similar conclusion when examining the impact of ownership structure on firm performance in 50 of the largest Jordanian Industrial Companies listed on Amman Stock Exchange, over the period 1996-2002 Controlling for capital structure, firm size, and sales growth, the OLS regression results show a non-linear and significant effect of ownership concentration on market-based measure (namely, market-to-book-value of equity), but negative effect on accounting-based measure, (namely ROA) The negative correlation between ownership and corporate performance is similarly found in the study of Lee and Chuang (2009) Examining on the ten-year (1994-2003) panel data of 569 Taiwanese listed companies, the empirical findings reveal that the ratio of mortgaged/pledged shares of directors and supervisors and firm performance constitute a significantly negative correlation, and that government institutional ownership and incorporated companies’ ownership are found to have a significant negative impact on Tobin’s Q Besides applying three statistical methods, such as OLS, fixed effects, and random effects methods, Lee and Chuang (2009) employ the F-test, Lagrange Multiplier test and Hausman test to determine the best method amongst the three However, Lee and Chuang (2009) do not discuss whether the variables in their study are endogenously related

A different approach regarding the impact of managerial ownership on firm performance is suggested by Abidin et al (2009), who examine the

association between board structure and corporate performance, where performance is defined as the value added efficiency of the firm’s physical and intellectual resources rather than the more commonly used Tobin’s Q or ROA Testing on a randomly selected sample of 75 companies listed on Bursa Malaysia, the study finds that board composition and board size have a positive impact on firm performance, while the effects of directors’ ownership and Chief Executive Officers duality on the value added efficiency of firm’s total resource are not established The managerial ownership – corporate value relationship is also discovered by Drakos and Bekiris (2010) Using a panel data of 146 firms quoted on the Athens Stock Exchange for the period 2000-2004 and based on the model developed by Demsetz and Villalonga (2001), Drakos and Bekiris (2010) estimate a system of two regression equations, in which managerial ownership and corporate performance (Tobin’s Q) are endogenous variables The main finding of the study indicated that when managerial ownership is treated as endogenous, this leads to a positive impact on corporate value

Government always plays an important and special role in its economy Accordingly, state-owned holdings have important and special impact on the firm performance This is the reason why the relationship between state ownership and firm performance is investigated in the research of Cornett et al (2009) and Hess et al (2010) Cornett et al (2009) examine

the performance differences between privately-owned and state-owned banks in 16 Far East countries from 1989 through 2004 to see how government ownership affects bank performance The study uncovers that state-owned banks operate less profitably, hold less core capital, and

have greater credit risk than privately-owned banks prior to 2001 However, in the post-Asian financial crisis period 2001-2004, the state-owned banks’ performance is improved Hess et al (2010) investigate the

effects of state ownership structure on firm values on Chinese listed firms for the period 2000-2004 The authors use both OLS and 2SLS analysis, which treats ownership concentration as endogenous The study confirms the U-shaped of the state ownership-performance relationship This implies that firms dominated by the various state players continue to maintain a greater respect by the market and outperform those with lower levels of state block-holdings However, at lower levels of state ownership, the firm value declines up to a reflection point of approximately 35 per cent beyond which the positive affects of state dominance take effect

Regarding the relationship between foreign ownership and firm performance, Aitken and Harrison (1999) use a panel of more than 4,000 Venezuelan plants between 1976 and 1989 and find that increases in foreign equity participation are correlated with increases in productivity for recipient plants with less than 50 employees Another finding from their study is that foreign investment negatively affects the productivity

of domestically owned plants Aydin et al (2007) apply t-test statistics to

examine over all quoted firms on the Istanbul Stock Exchange for the period 2003-2004 The results reveal that firms with foreign ownership perform better than domestic owned ones in respect to ROAs The similar results are found in the research of Yasar and Paul (2007), when they examine the performance effects of foreign ownership, from the perspective of firms in five transition economies, namely Poland,

Moldova, Tajikistan, Uzbekistan, and Kyrgyz Republic in 2002 The empirical findings indicate that foreign owned firms perform better than domestic counterparts, namely higher productivity, capital intensity, export and import shares, employment, and wages are found in firms with foreign ownership Bilyk (2009) investigates the effects of foreign ownership on performance of 264 Ukrainian manufacturing companies in 2002-2006 Bilyk (2009) divides foreign ownership into two types, namely foreign offshore and foreign non-offshore firms When fixed-effects regression is estimated, no consistent relationship between foreign ownership and performance is found Nonetheless, when more detailed classifications of foreign ownership are used, empirical results provide the evidence that there is a positive effect of investment coming from foreign investors on firms’ profitability in Ukraine Recently, Priya and Shanmughan (2011) use ownership structure of 425 Indian firms over the period 2003-2009 to examine whether differences in ownership structure can explain their differences in performance The empirical findings suggest foreign ownership relates positively to firm performance measured by Tobin’s Q and ROA These above-mentioned findings are opposite to those reported by Mihai (2012), who finds that there is no significant link between firm performance and the existence of foreign capital when investigating the foreign ownership-performance relation on

a sample of 63 Romanian listed companies for the period 2000-2010, where ROA and ROE are used as measures of financial and economic performance This indicates that not all cases prove the theory of foreign investment by Hill (2009) FDI recipient economy can benefit capital supplies, modern technologies, and management resources, which boost the host country’s economic growth (Hill (2009))

Trying to explain about discrepancies amongst researches regarding the ownership-performance relation, Hu and Izumida (2008) believe that the important reason was the realities of corporate governance environments

in which firms were embedded The disagreement was also owing to model specification and estimating technique applied Moreover, variable measurements and data issues could explain partially the differences

3 METHODOLOGY

3.1 Data

The data used for this thesis was collected from the website www.cophieu68.com1 It consisted of a representative sample selected from the total number of firms listed on the Hochiminh Stock Exchange for the period 2007-2010 The data was collected during a period of four years to avoid the bias when running regression on data collected for a single year The firms employed in this study must meet the following criteria: The firms must be quoted on Hochiminh Stock Exchange at least one year before the year of analysis; the proportion of foreign ownership

in the firms must be more than 0%; and the firms must be in operation in the course of the thesis With these criteria, the dataset included 83 firms for the year of 2007, 125 for 2008, 151 for 2009, and 208 for 2010, obtaining a total sample of 567 firm-years

3.2 The model

The past literature reveals that most of previous researches develop their own models based on the model put forward by Demsetz and Villalonga (2001) Similarly, the thesis applies the model built by Drakos and Bekiris (2010), which is the most recently modified version of Demsetz and Villalonga’s model The model is presented as follows:

Q = β0 + β1foreign_own + β2ln_assets + β3debt_asset + ε

1

This website was selected to collect data for the thesis based on its sufficient and reliable information for the model in this thesis

Where:

for the period of 2007-2010

Annual Tobin’s Q is calculated as the sum of total year-end book value of debt and total year-end market value of equity, divided by total year-end book value

of assets

foreign_own is Foreign Ownership, measured by percentage of

shares owned by foreigner in the firms

ln_assets is Firm Size, calculated by logarithm of total assets debt_asset is Leverage, followed the formula of Total year-end

debt over total year-end assets

Firm Performance

There are two common measures of firm performance One is accounting measure and the other is market-value measure Hirschey and Wichern (1984) examine the relationship between accounting and market-value measures on a 386-firm sample taken from the 1977 Fortune 500; and they suggest both accounting and market-value measures can be used as unique but imperfect indicators of profitability Sauaia and Castro (2002) use the Multinational Management Game to test whether Tobin’s Q is a good indicator of a company’s performance Comparing to the other seven past performance indicators in the same (namely market-share; return on sales; asset turnover; inventory turnover; return on assets; debt

to total assets; and return on equity), they find that companies that achieved a better performance, are associated with a higher value of the Tobin’s Q

Existing researches commonly employs two measures of firm performance, namely Tobin’s Q and accounting profit rates These two measures differ in some respects Tobin’s Q is a forward-looking performance measure, which takes investor psychology into account In contrast, accounting profit rate is backward-looking and unaffected by market psychology While accounting profit rates are affected by accounting practices, such as the different methods applied to valuations

of tangible and intangible capital; Tobin’s Q distorts performance comparisons of firms, because the numerator of Tobin’s Q (market value) partly reflects a firm’s intangible assets, yet the denominator of Tobin’s Q (replacement cost2) includes the firm’s tangible assets only (Demsetz and Villalonga (2001); Hu and Izumida (2008))

Since most economists have a better understanding of market constraints than of accounting constraints, they are in favor of Tobin’s Q (Demsetz and Villalonga (2001)) Moreover, accounting data is not thought as eligible variables in measuring a firm’s performance in countries where the accounting standards are imperfect, especially in developing countries (Hu and Izumida (2008)) Accordingly, like most of previous researches where the simple Tobin’s Q formula is commonly used, which is calculated by summing up market value of equity and book value of total

2

Replacement cost of assets is the book value of a firm’s assets with inflation adjustments (Cho (1998), p.107)

debt, and divided it by book value of total assets, Tobin’s Q ratio is chosen in the thesis as measure of firm performance

Foreign Ownership

The measures of ownership structure have been defined in diverse ways

in previous empirical studies in accordance with individual research purpose, but in general, they all express the fraction of shares held by a firm’s most significant shareholders

In order to determine whether exist the interrelation between firm performance and ownership structure, Himmelberg et al (1999) employ

the fraction of common equity holdings of top-level managers to measure ownership concentration Cho (1998) uses the percentage of insider ownership as ownership variable in his model

The proportions of shares held by the State and held by private block holders are chosen by Cornett et al (2009) to explore the impact of state

ownership on performance by comparing the performance of owned banks with that of state-owned banks in 16 Far East countries Hess et al (2010) use these ownership measures to examine the effect of

privately-the dominance of state and private block-holders on firm performance of Chinese listed firm during 2000-2004

Demsetz and Lehn (1985) measure concentration of ownership by the fraction owned by the five and twenty largest shareholders Demsetz and Villalonga (2001) continue to use percentage of equity owned by the five

largest shareholders as the measure of ownership structure This variable

is employed again in the researches by Welch (2003) and Fishman et al

(2005) when applying the model by Demsetz and Villalonga (2001) to examine the ownership-firm performance relationship on Australian Stock Exchange; and then is used in the study by Hess et al (2010) to

explore the link between state-dominant and non-state-dominant ownership and firm performance of Chinese listed companies Still based

on the model by Demsetz and Villalonga (2001), yet Drakos and Bekiris (2010) replace the ownership measure with the percentage of shares owned by directors of the Board, in order to correspond to the investigation of the relationship between managerial ownership and corporate performance on Athens Stock Exchange

The current thesis employs the percentage of shares owned by foreigner

in a firm as measure of foreign ownership This is consistent with the proxy of percentage of equity held by foreign investors used the previous studies (Yasar and Paul (2007); Bilyk (2009); and Mihai (2012))

Firm Size

Most of past researches include firm size in their models as control variable Himmelberg et al (1999) use logarithm of firm sales to measure

firm size, and argue that firm size has an ambiguous effect Himmelberg

et al (1999) argue that on the one hand, larger firms have more

difficulties in controlling all their activities, which can lead to agency problems and consequently to a decline in the performance; on the other