Does ownership structure enhance cash flow-based solvency? Evidence from an emerging market

Global financial turbulence has heightened solvency risks for corporations, particularly in emerging markets with fragile capital flows. In Vietnam, recent corporate bond defaults reveal that repayment failures often stem from insufficient operating cash flows relative to total liabilities. Prior studies highlight the predictive role of cash flow indicators in assessing firms’ financial distress and corporate failure (Beaver, 1966; Casey & Bartczak, 1985). This study examines whether ownership structures—foreign ownership, institutional ownership, and ownership concentration—enhance firms’ cash-flow-based solvency. Using panel data of 2,110 firm-year observations from listed non-financial firms during 2017–2023, we employ fixed-effects (FE) and quantile regressions (QR) to capture distributional heterogeneity. The results indicate that foreign ownership does not improve solvency and even exerts marginally adverse effects among financially weaker firms. Institutional ownership consistently strengthens solvency, with the strongest influence observed in liquidity-constrained firms, underscoring its monitoring and resource-providing functions. Ownership concentration, by contrast, shows weak and context-dependent impacts. These findings highlight that ownership-solvency relationships are conditional on firm characteristics and institutional quality. By focusing on a stringent cash-flow-based measure of solvency, this study extends corporate governance research beyond profitability and valuation, offering novel evidence from an emerging market under liquidity stress.