The Impact of Privatization on Firm Performance in a Transition Economy

41 Pages Posted: 3 Apr 2019

See all articles by Truong Dong Loc

Truong Dong Loc

University of Cantho - School of Economics and Business Administration (SEBA)

Ger Lanjouw

University of Groningen - Department of International Economics and Business

Robert Lensink

University of Groningen - Department of Economics, Econometrics and Finance; Wageningen UR - Development Economics Group

Date Written: April 2006

Abstract

The Vietnamese privatization programme, launched in 1992, differs from the usual Western privatization programmes in terms of the residual percentage of shares owned by the state and the portion of shares owned by insiders. This begs the question whether these differences influence the effects of the programme on firm performance. This study measures the impact of privatization on firm performance in Vietnam by comparing the pre‐ and post‐privatization financial and operating performance of 121 former state‐owned enterprises (SOEs). We find significant increases in profitability, sales revenues, efficiency and employee income. Results of applying the ‘difference‐in‐difference’ (DID) method, wherein a control group of firms is used to pick up the influence of other determinants of firm performance, suggest that the performance improvements may indeed be associated with equitization. Regression analyses reveal that firm size, residual state ownership, corporate governance and stock market listing are key determinants of performance improvements.

Keywords: Vietnam, privatization, enterprise performance, efficiency

JEL Classification: P31, L30, L32, L33, G30

Suggested Citation

Loc, Truong Dong and Lanjouw, Ger and Lensink, Robert, The Impact of Privatization on Firm Performance in a Transition Economy (April 2006). Economics of Transition, Vol. 14, Issue 2, pp. 349-389, 2006. Available at SSRN: https://ssrn.com/abstract=3364508 or http://dx.doi.org/10.1111/j.1468-0351.2006.00251.x

Truong Dong Loc (Contact Author)

University of Cantho - School of Economics and Business Administration (SEBA) ( email )

Can Tho
Vietnam

Ger Lanjouw

University of Groningen - Department of International Economics and Business ( email )

P.O. Box 800
9700 AV Groningen, Groningen 9700 AV
Netherlands
+31 (0)50 363 3713 (Phone)
+31 (0)50 363 7337 (Fax)

HOME PAGE: http://www.rug.nl/economics/faculty/medewerkers/lanjouwgj/index

Robert Lensink

University of Groningen - Department of Economics, Econometrics and Finance ( email )

P.O. Box 800
9700 AH Groningen
Netherlands

Wageningen UR - Development Economics Group ( email )

Hollandseweg 1
WAGENINGEN, 6706 KN
Netherlands

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