Investigating the Association between Residual State Ownership and Privatized Firm Efficiency

Abstract

This paper examines empirically the net impact of residual state ownership on privatized firm efficiency in the transitional context of Vietnam. Vietnamese privatization has its own characteristics. Instead of mass and full privatization, Vietnam has chosen a partial and gradual path. Thus, it is important to assess the net impact of residual state ownership on privatized firms during the post-privatization period. This study employs stochastic frontier analysis to investigate the association between residual state ownership and the efficiency of privatized firms, using a sample of all privatized firms that are listed on the Vietnamese stock exchanges over the period from 2007 to 2017. Also, two-stage least squares regression is incorporated into the model to deal with potential endogeneity issues. Our study provides evidence that state ownership should not be considered as a pure source of agency problems. Indeed, the net impact of residual state ownership on privatized firm efficiency is non-monotonic, and the relationship between residual state ownership and privatized firm efficiency is under an inverted U-shape. A moderate level (less than 50%) of residual state ownership might be beneficial to privatized firm efficiency whereas too much state ownership is detrimental to the efficiency of privatized firms.

Information asymmetry, government ownership, and dividends from the building construction from Indonesia

“…It is important to consider the ownership structure of the government to develop emerging markets who understand the dividend policy related to the agency in the market (Ben-Nasr, 2015). The government ownership is measured using the percentage of the government stock divided by the number of shares outstanding The government ownership is measured using the percentage of the government stock divided by the number of shares outstanding (Nguyen & Vo, 2020).…”

Stock Price Co-movement and Firm’s Ownership Structure in Emerging Market

“…Liu and Subramaniam (2013) claimed that there was less chance that Chinese Stateowned enterprises appoint Big Four Auditors or state-owned enterprises often have lower audit fee compared to their non-state-owned peers. In Vietnam, Nguyen and Vo (2020) posited that state listed firms have less incentives to disclose firm-specific information and state ownership is the major obstacle to the transparent disclosure process. Therefore, in the context of Vietnamese emerging market, we expect that stock return synchronicity is inversely related to state ownership.…”