The moderating role of state ownership in between product market competition and firm value: findings from GMM and fsQCA

Abstract

The study explores the link between product market competition (PMC) and firm value (FV) and examines the moderating role of the state ownership (SOE) variable in this relationship by using data from 555 listed firms on Vietnam's stock market from 2011 to 2019 on the Ho Chi Minh Stock Exchange (HOSE) and Ha Noi Stock Exchange (HNX). The System Generalized Method of Moments (SysGMM) is used to consider the relationship between variables. The findings from SysGMM indicate that product market competition has an effect on firm value. Firms with a high proportion of state ownership have a stronger correlation between product market competition and firm value than firms with a low proportion of state ownership. Additionally, we use fuzzy-set qualitative comparative analysis (fsQCA) to consider the causal relationship of variables in the model. The fsQCA results show that FV increased when the combination of lower product market competition, higher state ownership, higher firm, and lower debt ratio, which is a common trend to help clarify the evidence in emerging markets. The research is significant for investors, listed companies, and particularly organizations with state ownership, since it enables them to develop specific strategies for enhancing corporate value as the competitive market grows more challenging. Simultaneously, the study concentrated on examining the causal relationships between the variables while utilizing the FSQCA approach in order to contribute to the literature review in the emerging market.

Are market competition, customer concentration and company diversification associated with firm value?

“…The result of hypothesis testing suggests that market competition is negatively associated with firm value. This result is in line with Anuja and Thenmozhi (2023), Chang and Jo (2019), and Thu and Minh (2023). According to agency theory, an agency relationship is a contract between an agent and a principal in which both parties work for their interests (Jensen & Meckling, 1976).…”

“…Xing et al (2018) added that managers in companies with a higher competitive position could increase asymmetric information by passing price volatility to customers to reduce cash flow volatility. Anuja and Thenmozhi (2023), Jo (2019), andThu andMinh (2023) concluded that market competition is negatively associated with firm value. Companies in highly competitive markets face risks that prevent them from achieving their efforts.…”

“…Liu et al (2023) and Satt et al (2022) concluded that market competition is positively associated with firm value. Anuja and Thenmozhi (2023), Jo (2019), andThu andMinh (2023) suggested that market competition is negatively associated with firm value. Rakestraw (2022) and Sheikh (2021) found that market competition is not associated with firm value.…”

A configural model of analytics capabilities, ambidexterity, co‐opetition, and firm performance in the supply chain context

“…These combinatorial routes will provide more insight and understanding with respect to how the determinants interact and which of the determinants are more relevant, necessary, or sufficient to generate a desired firm outcome (e.g., firm performance), as shown in past business strategy development studies (Khuong & Anh, 2022;Thu & Minh, 2022). By drawing on expert fsQCA suggestions (Pappas et al, 2020) and extant empirical and theoretical discussions, we developed the configural model presented in Figure 1.…”

Foreign ownership and product market competition's influence on firm performance: Mediating role of the corporate governance index

“…Product market competition requires enterprises to have effective CG systems to ensure the quality of operations and provide accurate information to stakeholders (Majeed et al, 2018; Thu & Minh, 2022). Thus, when product market competition is high, CG is required to work effectively, ensuring business development and providing solutions to address competitors in the industry (De Almeida & Dalmácio, 2015; Yeh & Liao, 2020).…”