Digital transformation and corporate restructuring: does corporate governance matter?

Abstract

Purpose

Adopting digital transformation is changing the methods through which companies' function, generating novel possibilities and difficulties that force firms to adjust to remain competitive in the digital era. It is critical for firms to embrace this change and utilize technology to develop a more flexible, proactive and effective approach as digital transformation continues to advance at an accelerating pace. Vietnam has been placed at the forefront of these changes in attracting investments and becoming a hub of international trade. As a result, Vietnamese firms have been implementing restructuring and adopting digital transformation to remain competitive with the flow of foreign investment. This paper aims to examine the effects of digital transformation on corporate restructuring in Vietnam. The authors then investigate the moderating role of corporate governance in the digital transformation – corporate restructuring nexus.

Design/methodology/approach

The authors employ content analysis to extract information from the annual reports of 747 Vietnamese listed companies, where the authors focus on specific phrases, such as “digitalization”, “big data”, “cloud computing”, “blockchain” and “information technology” over a period of 11 years, from 2011 to 2021. The frequency count of these keywords is calculated to represent the level of digital transformation for the Vietnamese listed firms. A final sample of 118 Vietnamese listed firms with sufficient data is selected for the analysis using the generalized method of moments (GMM) approach.

Findings

The results indicate that digital transformation and corporate governance negatively impact corporate restructuring when their effect on corporate restructuring is examined independently. However, corporate governance strengthens the effect of digital transformation on corporate restructuring.

Originality/value

This paper is one of the first to investigate the moderating role of corporate governance on the effect of digital transformation on corporate restructuring in Vietnam. The findings inspire listed firms in Vietnam to implement digital transformation during their corporate restructuring to enhance performance.