The influence of privatization on financial performance of Vietnamese privatized state-owned enterprises
-
DOIhttp://dx.doi.org/10.21511/imfi.16(3).2019.30
-
Article InfoVolume 16 2019, Issue #3, pp. 341-352
- Cited by
- 1348 Views
-
462 Downloads
This work is licensed under a
Creative Commons Attribution 4.0 International License
This research evaluates the differences in financial performance of enterprises before and after privatization aiming to find out the influence of privatization on the enterprises’ performance. The study is based on the audited financial statements of 105 Vietnamese privatized enterprises privatized in the period from 2005 to 2016. Applying the Wilcoxon signed-rank test, the obtained results prove that after privatization profitability and outputs of investigated firms are significantly higher than prior privatization. However, there is no significant change of leverage. Applying a regression model to evaluate the factors affecting financial performance of firms in the research model, it was found out that the proportion of state ownership, economic growth, operating period, enterprise`s size, and business risk have positive influence on the financial performance of research firms. However, the leverage of these firms has a negative impact on the financial performance. In accordance with the obtained results, this study suggests that the privatization process should be continued regardless of firm size or business type. The government should create fair competition environment, remove incentives and supports for State-Owned Enterprises (SOEs), manage changes in privatized firms, and enforce the legal system.
- Keywords
-
JEL Classification (Paper profile tab)G32, G34, M48, L33
-
References32
-
Tables6
-
Figures0
-
- Table 1. Definition of criteria for analysing financial performance
- Table 2. Expected impact of financial criteria on financial performance
- Table 3. Results of the Wilcoxon Signed Rank test for research firms’ financial performance
- Table 4. Summary of variables of the model
- Table 5. Test result for multicollinearity
- Table 6. Result summary for the linear regression estimation of models ROA, ROS, ROE
-
- Adams, S., & Mengistu, B. (2008). Privatization, governance and economic development in developing countries. Journal of Developing Societies, 24(4), 415-438.
- Alipour, M. (2012). Has privatization of state-owned enterprises in Iran led to improved performance? International Journal of Commerce and Management, 23(4), 281-305.
- Astami, E. W., Tower, G., Rusmin, R., & Neilson, J. (2010). The effect of privatization on performance of state-owned-enterprises in Indonesia. Asian Review of Accounting, 18(1), 5-19.
- Aussenegg, W., & Jelic, R. (2002). Operating Performance of Privatized Companies in Transition Economies – The Case of Poland, Hungary and the Czech Republic. EFMA 2003 Helsinki Meetings, 34-52.
- Boubakri, N., Cosset, J. C., & Guedhami, O. (2005). Liberalization, corporate governance and the performance of privatized firms in developing countries. Journal of Corporate Finance, 11(5), 767-790.
- Boycko, M., Shleifer, A., & Vish, R. W. (1996). A theory of privatization. Economic Journal, 106(405), 309-319.
- Carlin, T.M., Pham, C. D. (2009). From Public to Private: Evidence from a Transitional Economy Setting. Australian Accounting Review, 19(3), 207-216.
- Chen, G.M., Firth, M., & Zhang, W. W. (2008). The efficiency and profitability effects of China’s modern enterprise restructuring program. Asian Review of Accounting, 16(1), 74-91.
- Chu, T. T. T., Nguyen, T. H., & Ngo, T. Q. (2015). Analyzing factors influencing financial performance: The case study of nonfinancial listed firms on Ho Chi Minh stock exchange. Journal of Economic Development, 215(1), 59-66.
- D’Souza, J., & Megginson, W. L. (1999). The Financial and Operating Performance of Privatized Firms during the 1990s. The Journal of Finance, 54(4), 1397-1438.
- Doan, N. P. (2014). Improve financial performance of State owner enterprises after privatization (Doctoral Thesis). Retrieved from online library of University of Economics Ho Chi Minh City.
- Harper, J. T. (2002). The performance of privatized firms in the Czech Republic. Journal of Banking and Finance, 26(4), 621-649.
- Hoang, T., & Chu, N. (2008). Data Analysis with SPSS. Hong Duc Publication House.
- Huang, Z., & Wang, K. (2011). Ultimate privatization and change in firm performance: evidence from China. China Economic Review, 22(1), 121-132.
- Laporta, R., & Lopez, F. (1997). The Benefits of Privatization: Evidence from Mexico (Working Paper No. 6215).
- Macquieira, C., & Zurita, S. (1996). Privatizations en Chile: Eficiencia Y Politicas Financieras. Estudios de Administration, 3(2), 1-36.
- Mateus, M. A. F. (2016). The Impact of Privatization on Firms’ Financial Performance: An Analysis to REN – Redes Energйticas Nacionais. ISCTE Business School.
- Mathur, I., & Banchuenvijit, W. (2007). The effects of privatization on the performance of newly privatized firms in emerging markets, Emerging Markets Review, 8(2), 134-146.
- Megginson, W. L., Nash, R. C., & Randenborgh, M. V. (1994). The Financial and Operating Performance of Newly Privatized Firms: An International Empirical Analysis. The Journal of Financial, 49(2), 403-452.
- Nguyen, T. X. H. (2017). Effects of privatization on financial performance of Vietnam SOEs (Ph.D. dissertation). Retrieved from online library of The National Economics University.
- Omran, M. (2009). Postprivatization Corporate governance and firm performance: the role of private ownership structure concentration, identity and board composition, Journal of Comparative Economics, 37(2009), 658-673.
- Oqdeh, L. N., & Nassar, M. A. (2011). Effects of Privatization on Firms Financial and Operating Performance: Evidence from Jordan. Administrative Sciences, 38(1), 288-203.
- Pham, C. D. (2009). Financial performance of privatized and listed SOEs in Vietnam (Ph.D. Thesis). Retrieved from Macquarie University online library.
- Pham, C. D. (2010). Examining the profitability of privatized SOEs and newly listed firms: the case of Vietnam. Journal of Economics and Developments, 39, 21-28.
- Pham, C. D. (2017). The effects of privatization on the financial position and performance of firms in emerging markets: Evidence from Vietnam. International Journal of Business, Economics and Law, 13(1), 38-46.
- Sjoholm, F. (2006). State owned enterprises and equitization in Vietnam (Working paper No. 228). Stockholm School of Economics.
- Tabachnick, B. G., & Fidell, L. S. (1996). Using Multivariate Statistics (3rd ed.). New York: Harper Collins College Publishers.
- Tran, G. (2007). The impact of corporate governance on the performance of privatized firms in Vietnam. Research Center in Management.
- Tran, T. C. et al. (2007). Vietnamese State-Owned Enterprises after Equitization: Performance, Emerging Issues, and Policy Recommendations. Vietnam Economic Management Review, 2, 40-56.
- Truong, L. D., Lanjouw, G., & Lensink, R. (2006). The impact of privatization on firm performance in a transition economy. The case of Vietnam. Economics of Transition, 14(2), 349-389.
- Vu, D. H. (2013). The factors impact on financial performance of privatized firms in the economic sector in central Vietnam. The National Economics University.
- Wei, Z., Oscar, V., D’Souza, J., & Hassan, K. (2003). The financial and operating performance of China’s newly privatized firm. Financial Management, 32(2), 107-126.