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http://dx.doi.org/10.13106/jafeb.2020.vol7.no10.663

Government Control and Privatized Firms' Performance: Evidence from Vietnam  

NGUYEN, Manh Hoang (School of Business, International University, Vietnam National University)
VO, Quy Thi (School of Business, International University, Vietnam National University)
Publication Information
The Journal of Asian Finance, Economics and Business / v.7, no.10, 2020 , pp. 663-673 More about this Journal
Abstract
To enhance the performance of privatized firms and state-owned enterprises, Vietnamese government set up a specialized monitoring body named State Capital Investment Corporation (SCIC) in 2006 to supervise their performance. This motivated us to conduct this study to investigate the effective control of SCIC on privatized firms' performance. We collected the annual reports of 500 non-financial privatized firms listed on HSX and HNX during the period from 2007 to 2017 from Thomson Reuters. Observations with missing values were removed and trimming outliers were implemented resulting in a dataset comprising of 4146 firm-year observations. We applied a quadratic regression model of state ownership on firms' performance, and applied the method of Baron and Kenny (1986) to test the moderating effect of SCIC control. To fix "selection bias" that may occur and result in endogeneity of moderator (M), we utilized the PSM technique to analyze the marginal effect of the moderator (SCIC) on privatized firms' performance. Our findings indicate a positive moderating role of SCIC on the relationship between the state ownership and firms' performance. This implies that there is a positive effect of liberating the management of the private firms from government control, which also means that lesser the intervention of government in the day to day operational activities of a private firm, better the performance of a privatized firm is.
Keywords
State Ownership; Privatization; Firm Performance; Vietnam;
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