FIRM PERFORMANCE: THE EFFECTS OF EMPLOYEES’ EDUCATIONAL LEVELS AND OWNERSHIP STRUCTURES

Abstract

This study examines how firm performance can be influenced by two corporate governance factors: firm’s selection of employees based on educational level and firm’s ownership structure. The educational level is measured by a ratio of employees with a college degree to total employees. Ownership structure is measured by three dummy variables describing state?owned enterprises (SOEs), privately?owned enterprises (POEs), and foreign?invested enterprises (FIEs). Empirically, I analyze the performance of 12,308 firms in the Vietnamese economy over a three?year period (2004?2006). The results show the higher the educational level, the better the firm performance. Moreover, SOEs perform better than POEs and FIEs perform better than SOEs. Finally, SOEs can benefit from high educational level of their employees more than POEs can.