Cogent Business & Management (Dec 2024)

The link between firm risk-taking and CEO power of listed firms on the Vietnamese stock market: the role of state ownership

  • Ngoc Thanh Tran,
  • Thi Ngoc Dung Pham,
  • Dien Duan Nguyen,
  • Trung Kien Tran,
  • Gia Quyen Phan,
  • Tran Thai Ha Nguyen

DOI
https://doi.org/10.1080/23311975.2024.2302193
Journal volume & issue
Vol. 11, no. 1

Abstract

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AbstractThe Chief Executive Officer (CEO) is pivotal in firm governance and is tasked with policy implementation and maximizing shareholder benefit. However, predicting CEO behaviour remains challenging, especially when considering CEO power (CEOP). Hence, this study explores the link between CEOP and firm risk-taking (FRT) in selected firms on the stock market in Vietnam from 2010 to 2020. Utilizing the Entropy weight methodology, a CEOP index combines structural, ownership, and expert power indicators. The SYS-GMM approach mitigates potential endogeneity issues, revealing a positive correlation between CEOP and FRT. Interestingly, CEO risk aversion increases in state-owned firms’ participants, suggesting heightened supervision. Moreover, each characteristic of the CEOP index uniquely influences FRT. The findings offer theoretical and practical insights for enhancing governance and supervision mechanisms to optimize stakeholder benefits.

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