Does Board Size Affect Financial Distress Equally? Evidence from Vietnam's Construction and Food Manufacturing Industries

Purpose: This study examines the impact of board size on corporate financial distress in Vietnam. Design/methodology/approach: The study uses a dataset from listed companies in the Construction & Building Materials industry and the Food Manufacturing industry. Generalized least squares regression is employed to address issues related to serial correlation and heteroskedasticity. Findings: Board size is statistically significant for corporate financial distress, but the impact differs between the two industries. A smaller board size is preferred in the construction industry due to the need for comprehensive oversight of complex projects and the importance of monitoring and risk management. A smaller board size facilitates efficient coordination and timely decision-making. In contrast, in the food manufacturing industry, a larger board size enhances financial stability and reduces financial distress, as firms benefit from the advisory role of a larger board. Research limitations/implications: The research can be expanded to include more industries or a cross-country analysis. Originality/value: This is the first study to compare the role of board size in corporate financial distress between different industries in Vietnam. It shows the importance of board size in financial management and emphasizes that the optimal board size should be determined based on the specific characteristics of each industry.