Tax incentive policy and firm performance: evidence from Vietnam

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This paper aims to assess the impact of the tax incentive policy on firm performance after privatization in Vietnam. Using research data of 260 privatized enterprises in Vietnam, this study sheds light on whether tax incentive policies can help improve firm performance after privatization. The paper utilizes a pre-post comparison approach proposed by Megginson, Nash, and Van Randenborgh (1994). The research results reveal that privatized enterprises with tax incentives have improved profitability (ROA, ROE, ROS) and operating efficiency (NIEFF) and reduced leverage after privatization. A statistical reduction in the number of employed and an improvement in output (real income) after privatization are not observed. Besides, there is no statistical evidence proving that privatized enterprises have experienced significant changes in standard deviations of firm performance measures after privatization in Vietnam. Given significant improvements in the profitability of post-privatized enterprises with tax incentives, the authors propose some managerial implications for the Vietnamese government, investors and non-privatized state-owned enterprises (SOEs).

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    • Table 1. Summary of testable mean predictions for privatized SOEs with tax incentives
    • Table 2. Summary of testable standard deviation predictions
    • Table 3. Variable measurement
    • Table 4. Frequency statistics
    • Table 5. Descriptive statistics
    • Table 6. Testing results of predictions for privatized SOEs with corporate income tax incentives
    • Table 7. Testing results of predictions for privatized SOEs without corporate income tax incentives
    • Table A1. Performance changes of privatized SOEs in agriculture, fishing and aquaculture and mining sectors (privatized SOEs with tax incentives)
    • Table A2. Performance changes of privatized SOEs in the manufacturing and construction sectors (privatized SOEs with tax incentives)
    • Table A3. Performance changes of privatized SOEs in the services sector (privatized SOEs with tax incentives)
    • Table A4. Performance changes of unlisted SOEs after privatization (privatized SOEs with tax incentives)
    • Table A5. Performance changes of listed SOEs after privatization (privatized SOEs with tax incentives)
    • Table A6. Performance changes of small and medium-sized SOEs after privatization (privatized SOEs with tax incentives)
    • Table A7. Performance changes of large SOEs after privatization (privatized SOEs with tax incentives)
    • Conceptualization
      Trinh Quoc Trung
    • Investigation
      Trinh Quoc Trung, Nguyen Van Tan
    • Methodology
      Trinh Quoc Trung, Nguyen Van Tan
    • Project administration
      Trinh Quoc Trung
    • Resources
      Trinh Quoc Trung
    • Supervision
      Trinh Quoc Trung
    • Validation
      Trinh Quoc Trung
    • Writing – review & editing
      Trinh Quoc Trung, Nguyen Van Tan
    • Data curation
      Nguyen Van Tan
    • Formal Analysis
      Nguyen Van Tan
    • Software
      Nguyen Van Tan
    • Visualization
      Nguyen Van Tan
    • Writing – original draft
      Nguyen Van Tan