Essays on privatization and corporate governance in Vietnam
Date: 5 December 2014
Venue: University of Antwerp, Kapel Grauwzusters - Lange Sint-Annastraat 7 - 2000 Antwerpen
PhD candidate: Ngo My Tran
Principal investigator: Prof. dr. Walter Nonneman
Co-principal investigator: Prof. dr. Ann Jorissen
Short description: PhD defense Ngo My Tran - Faculty of Applied Economics
Abstract: This thesis consists of three essays investigating changes in firm performance of Vietnamese firms following an ownership change through privatization and the economic value of adopting "good corporate governance" following a change in firm ownership through an initial public offering (IPO). The first essay is an econometric analysis of the effects of privatization on firm performance, based on an extensive panel database of individual Vietnamese firms in the period 2004-2008. This study overcomes some methodological shortcomings in previous studies on the effect of privatization on performance in transition economies such as no control of selection bias and the inability to single out the privatization effect from the concurrent effects of other economic factors. We find that a shift from state or collective ownership to private ownership can consistently enhance the performance of switchers in terms of profitability. The second essay extends predictions from a game theoretical model evaluating the net effect of government ownership on firm performance and empirically tests these predictions using a panel dataset of Vietnamese firms in the period 2004-2012. The empirical results estimated from static and dynamic models confirm the theoretical propositions of a negative relationship between the extent of state ownership and firm profitability and productivity. Also, we find that, on average, reduced state ownership is conducive to better performance in terms of profitability and labor productivity. However, for large firms the opposite seems to hold. The final essay focuses on the effectiveness of Western-style corporate governance principles for listed firms at the time of IPO in Vietnam (using hand-collected data of 660 IPO firms in the period 2006-2011). By implementing the instrumental variable methods with 2SLS estimation to control for the endogeneity problem, the thesis provides evidence on the effectiveness of good governance practices in the context of Vietnam. We find that installing independent boards (in terms of non-executive directors), the adoption of a more independent supervisory board and the appointment of Big 4 auditor as an external governance mechanism significantly increase firm value of Vietnamese firms at IPO. Moreover, we find a positive correlation between a constructed governance index and firm value at IPO.