Board capital and bank efficiency: insight from Vietnam
Abstract
This study investigates the role of board capital on bank’s efficiency for a sample of 45 banks in Vietnam over 2011–2015. Using robust panel regression, we find board capital is important in making Vietnamese bank efficient even after controlling its endogeneity issue. This study further documents that networking capital and experience capital are the important factors, but not education for bank efficiency. The findings of this research contribute to the entrenchment hypothesis in agency theory, where networking and experience can be the bargaining power for manager (agent) in securing their compensation. It also contributes to human capital theory and resource base view theory where it shows networking and experience are stratetic human capital resources for bank efficiency. The findings imply that shareholders should consider the networking and experience of board members during board elections. Future research may engage with the intervention of corporate governance monitoring or test it in other developing countries context.
Keyword : board capital, networking capital, education capital, experience capital, bank efficiency
How to Cite
Kontesa, M., Nichol, E. O., Bong, J.-S., & Brahmana, R. K. (2020). Board capital and bank efficiency: insight from Vietnam. Business: Theory and Practice, 21(2), 483-493. https://doi.org/10.3846/btp.2020.11238
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Hamori, M., & Koyuncu, B. (2015). Experience matters? The impact of prior CEO experience on firm performance. Human Resource Management, 54(1), 23–44. https://doi.org/10.1002/hrm.21617
Hanafizadeh, P., & Marjaie, S. (2019). Trends and turning points of banking: a timespan view. Review of Managerial Science, 1–37. https://doi.org/10.1007/s11846-019-00337-4
Harris, C. M., Pattie, M. W., & McMahan, G. C. (2015). Advancement along a career path: the influence of human capital and performance. Human Resource Management Journal, 25(1), 102–115. https://doi.org/10.1111/1748-8583.12047
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Hillman, A. J., & Dalziel, T. (2003). Boards of directors and firm performance: Integrating agency and resources dependence perspectives. Academy of Management Review, 28, 383–396. https://doi.org/10.5465/amr.2003.10196729
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Jeremias, J., & Gani, L. (2013). The impact of board capital and board characteristics on firm performance. The British Accounting Review, 46(2), 135–153. https://doi.org/10.1016/j.bar.2013.12.001
Karamanou, I., & Vafeas, N. (2005). The association between corporate boards, audit committees, and management earnings forecasts: An empirical analysis. Journal of Accounting Research, 43(3), 453–486. https://doi.org/10.1111/j.1475-679X.2005.00177.x
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