Abstract
This paper examines the impact of equitization on financial and operating performance of state-owned enterprises (SOEs) in Vietnam. Previous related privatization theories have not explained whether there is an improvement in financial and operating performance of equitized SOEs compared to non-equitized SOEs or not. This study proposes to use with-without comparison method through the average treatment effect measuring the impact of equitization on financial and operating performance of SOEs. By using data of 114 SOEs equitized in the period from 2012 to 2014, the author finds that equitized SOEs can not improve profitability, operating efficiency, and output when considering non-equitized SOEs. There is also no evidence for a reduction in the number of employees of equitized SOEs after equitization. These findings are in contrast to previous studies in Vietnam, but there are similarities with the results of studies in China. This is because equitized SOEs in the early post-equitization period in Vietnam are still monitored by the Vietnamese government, as well as the equitized enterprises in the period 2012-2014 are mainly large-scale ones with slow change of operating objectives, monitoring mechanism and weak competitiveness after equitization. However, equitization can help equitized SOEs operate more efficiently than non–equitized SOEs when considering non-listing status or industry group. This research provides implications for the Vietnamese government to encourage non-equitized enterprises to participate in the equitization program actively. The research results also help investors to have appropriate long-term investment strategies in equitized SOEs. This paper also has some limitations for further research.
Highlights
This paper examines the impact of equitization on financial and operating performance of stateowned enterprises (SOEs) in Vietnam
In Vietnam, the state often uses the term ‘equitization’ instead of ‘privatization’ because equitization is the process of transferring assets of SOEs to the private sector, but the state still controls equitized SOEss after equitization in some SOEs
Considering only post-equitization financial and operating performance, equitization does not help equitized SOEs to improve their profitability, operating efficiency, real sales, labor, and leverage compared with non-equitized SOEs
Summary
This paper examines the impact of equitization on financial and operating performance of stateowned enterprises (SOEs) in Vietnam. Previous related privatization theories have not explained whether there is an improvement in financial and operating performance of equitized SOEs compared to non-equitized SOEs or not. Studies in China and Vietnam, in particular studies by Nhan and Son, Hung et al, Loc and Tran use with-without comparison method, but these studies use inappropriate characteristics to define the similarity between equitized and non-equitized SOEs 8–10 These studies do not use industry characteristics to compare these two groups. (2) Previous studies in Vietnam focused on SOEs equitized in the first and the second stage, so these studies have not considered large-sized SOEs; (3) Previous studies have not performed robustness testing in propensity score matching technique, and they only used one radius matching to set up common support area. This study is organized into six parts: (1) introduction, (2) review of prior studies, (3) research methodology and data, (4) empirical results, (5) conclusions and discussion, and (6) summary and implications
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