Impact of Residual State Ownership on Privatised Firm Performance: Evidence from Vietnamese Listed Firms - NCS. Nguyễn Mạnh Hoàng

Tên luận án: Impact of Residual State Ownership on Privatised Firm Performance: Evidence from Vietnamese Listed Firms
Ngành: Quản trị kinh doanh
Mã ngành: 9340101
Nghiên cứu sinh: Nguyễn Mạnh Hoàng
Người hướng dẫn: PGS.TS. Võ Thị Qúy, TS. Reza Hajargasht
Cơ sở đào tạo: Trường Đại học Quốc tế, Đại học Quốc Gia TP. HCM
Tóm tắt luận án 
The rise of state capitalism in the 21st century has reignited research on the impact of state ownership. This thesis has provided both theoretical and managerial contributions via rigorously investigating the net impact of residual state ownership on 500 Vietnamese privatised firms listed on the Hanoi and Ho Chi Minh City stock exchanges over the period of 2007–2017.
Theoretical contributions
This research offers four significant contributions to the existing literature. Firstly, our results suggest that state ownership should not be considered to be linearly beneficial or detrimental to firm performance. Instead, we provide evidence for a non-monotonic impact of residual state ownership on the performance of privatised firms in the context of the transitional country of Vietnam. This finding is established based on rigorous econometric methodologies including semiparametric regression and semiparametric regression with instrumental variable models. 
Secondly, we provide some evidence of an inverted U-shaped relationship between residual state ownership and privatised firm efficiency (or the inverse of agency costs). This demonstrates that in a transitional context, relinquishing governmental control via privatisation can significantly benefit privatised firms’ efficiency. However, further reduction of state ownership may decrease the efficiency of privatised firms. This is consistent with Shleifer and Vishny (1997), who suggest that in some transitional contexts identified with weak corporate governance and limited protection of shareholders, agency problems associated with managerial control might appear and outweigh the benefits of reduction in political control as state ownership falls. 
Thirdly, our study finds that the impact of residual state ownership is significantly moderated by various factors including government policies and mechanisms. In this research, we explore and uncover the positive moderating role of the independent government monitoring body on the relationship between residual state ownership and privatised firm performance.
Fourthly, we discover the direct positive impact of hardening of soft budget constraint on the performance of privatised firms during the post-privatisation period. Our study provides empirical evidence that privatised firms that experience hardened budget constraint significantly outperform those that experience soft budget constraint. 
Managerial contributions
The results from our study provide some implications for policymakers and managers of SOEs to improve the reforms in the Vietnamese state sector. Firstly, our study supports the positive effects of privatisation. Evidence from our research indicates that relinquishing dominant control of privatised firms can significantly improve the performance and efficiency of privatised firms. However, our study also provides evidence that in the transitional context of Vietnam, state ownership is not merely a source of inefficiency. A moderate level of state ownership (less than 40%) is beneficial to privatised firm performance. At such a moderate level, state ownership acts possibly as a corporate governance device which prevents both the wrongdoing of managers and the expropriation behaviour of other blockholders. We call this the “monitoring” effect of state ownership. However, when state ownership becomes dominant (more than 40%), the “expropriation” effect of state ownership emerges and outweighs the monitoring effect as the state tends to direct firms to pursue socioeconomic objectives which might be contradictory to the pure economic objectives of ordinary shareholders. This finding supports the gradual and partial privatisation policy of the Vietnamese government. Since the country has a weak corporate governance system and limited protection of minority shareholders, there could be a temporary optimal position where state and private investors hold a balanced ownership to simultaneously supervise operations and promote the efficiency of privatised firms.
Secondly, our empirical evidence suggests that the independent government monitoring body positively moderates the relationship between residual state ownership and privatised firm performance. Findings from our study indicate that transferring the management of privatised firms from the central government, provincial governments and line ministries to one independent government monitoring body may increase the performance of privatised firms. The specialised monitoring body is intended to free up ministries from governing SOEs, which leads to less government intervention into the day-to-day business activities of SOEs. In addition, the specialised monitoring body is expected to introduce a market mechanism into SOEs and pursue pure state asset maximisation objectives. The combination of the above factors may result in higher performance among SOEs as measured by both profitability and market performance. 
Thirdly, our findings reveal that hardening of soft budget constraint policy can directly enhance the performance of privatised firms. In the global context, there is evidence that state ownership is associated with a soft budget constraint problem, especially in terms of soft credit (Li, Yue, & Zhao, 2009; Lu, Thangavelu, & Hu, 2005), which may distort the efficiency of enterprises (János Kornai, 1986). In our study, we find that privatised firms which experience hardened soft budget constraint outperform those that do not experience hardened soft budget constraint in terms of both profitability and market performance. Under hardening of soft budget constraint policy, SOEs expect to be treated equally to non-state enterprises. This ensures fair competition between the state sector and other economic sectors. Under this policy, SOEs are forced to transform themselves and become more efficient or they will be eliminated by private enterprises with higher efficiency.