MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY Le Hoang Yen Khanh THE IMPACT OF AGENCY COST ON FIRM PERFORMANCE A COMPARISON BETWEEN STATE OWNED AND NON STATE OWNED ENTERP[.]
MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY Le Hoang Yen Khanh THE IMPACT OF AGENCY COST ON FIRM PERFORMANCE: A COMPARISON BETWEEN STATE-OWNED AND NON-STATE-OWNED ENTERPRISES LISTED ON VIETNAM STOCK MARKET DOCTOR OF PHILOSOPHY IN ECONOMICS Ho Chi Minh city - 2022 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY Le Hoang Yen Khanh THE IMPACT OF AGENCY COST ON FIRM PERFORMANCE: A COMPARISON BETWEEN STATE-OWNED AND NON-STATE-OWNED ENTERPRISES LISTED ON VIETNAM STOCK MARKET Major: Finance and Banking Reference: 9340201 DOCTOR OF PHILOSOPHY IN ECONOMICS ACADEMIC SUPERVISORS: Dr Pham Phu Quoc Dr Tran Phuong Thao Ho Chi Minh city - 2022 (this page is intentionally blank) i ACKNOWLEDGEMENTS I acknowledge that this submission is my own work and except for the reference, this thesis contains no material previously published or written by other authors This thesis does not contain material pressed out from a thesis or document presented for any degree or diploma at University of Economics Ho Chi Minh city or other educational institutions This research is not the work of mine only but to complete this thesis, I have been benefited from the following people: Firstly, the most important people who set the light on my research from the beginning are my advisors – Dr Pham Phu Quoc and Dr Tran Phuong Thao They are always by my side to support me from initial ideas and then develop the thought into the final research Secondly, I would like to express my gratitude to my family members who nurture my passion of higher education, especially, my parents and beloved husband who assist in taking care of me from pregnancy and our newborn baby to accomplish this study And the last but not least, my managers always stay with me when I have problem and get stuck They never leave me but provide me with useful solutions to finish my research Le Hoang Yen Khanh January 2021 ii TABLE OF CONTENT ACKNOWLEDGEMENTS………………………………………….… …………….i TABLE OF CONTENT…………………………………………………….… ………ii LIST OF ABBREVIATIONS………………………………………… ………… vii LIST OF TABLES…………………………………………………… ……… …….viii LIST OF FIGURES………………………………………………………… ………xi ABSTRACT…………………………………………………………………………… xii CHAPTER 1: INTRODUCTION 1.1 INTRODUCTION 1.2 PRACTICAL RESEARCH CONTEXT 1.3 RESEARCH MOTIVATIONS 1.4 RESEARCH OBJECTIVES AND QUESTIONS .11 1.5 DATA, METHODOLOGY 13 1.5.1 Data 13 1.5.2 Methodology 14 1.6 CONTRIBUTIONS .15 1.7 STRUCTURE OF THE THESIS 15 CHAPTER 2: LITERATURE REVIEW 26 2.1 INTRODUCTION 26 2.2 AGENCY COST AND FIRM PERFORMANCE: THEORY AND EVIDENCE27 2.2.1 Agency cost in business operation 27 2.2.2 Impact of agency cost on firm performance 31 2.2.3 Different relationship between agency cost and firm performance in SOEs and non-state-owned-enterprises 38 2.2.3.1 Agency cost and firm performance in SOEs 39 2.2.3.2 Agency cost and firm performance in non-state-owned enterprises 45 2.2.4 Hypotheses for the comparison of agency cost in SOEs and non-stated owned enterprises .49 2.2.5 Hypotheses for different relationship between agency cost and firm performance 52 2.3 STATE-OWNERSHIP AND FIRM PERFORMANCE: THEORY AND EVIDENCE .55 2.3.1 The role of state ownership 55 iii 2.3.2 State involvement in listed firms .57 2.3.3 Hypotheses for the relation between state ownership and firm performance 62 2.4 CHAPTER SUMMARY 65 CHAPTER 3: DATA AND METHODOLOGY 69 3.1 INTRODUCTION 69 3.2 DATA .69 3.2.1 Type of data 69 3.2.2 Sample 70 3.2.3 Data collection 71 3.3 VARIABLE DEFINITION 74 3.3.1 Proxies for agency cost 74 3.3.2 Measures of firm performance 76 3.3.3 Measure of state ownership .78 3.3.4 Measure of control variables 78 3.3.4.1 Internal factors 78 Capital structure .79 Sales growth 79 Profit growth 80 Investment opportunity 80 3.3.4.2 External factors 80 Gross Domestic Product (GDP) growth rate 81 Consumer Price Index (CPI) 81 Country investment growth rate 81 3.4 MODEL SPECIFICATON 83 3.4.1 General model specification 83 3.4.2 Methodology for comparison of the agency cost of state-owned firms and nonstate-owned enterprises 86 3.4.2.1 Model for the comparison of agency cost of two groups of enterprises 86 3.4.2.2 Estimation method 86 3.4.3 Methodology for the different impact of agency cost on firm performance of two groups of enterprises 87 3.4.3.1 Model for the different impact of agency cost on firm performance of two groups of enterprises .87 3.4.3.2 Estimation method 88 3.4.4 Methodology for the relationship between state-ownership and firm performance 89 iv 3.4.4.1 Model for the relationship between state-ownership and firm performance89 3.4.4.2 Estimation method 90 3.5 ROBUSTNESS TESTS .93 3.5.1 Different proxies for agency cost 93 3.5.2 Alternative measures for firm performance .94 3.5.3 Other method of estimation 94 3.6 CHAPTER SUMMARY 95 CHAPTER 4: EMPIRICAL RESULTS .96 4.1 INTRODUCTION 96 4.2 DESCRIPTIVE STATISTICS AND CORRELATION TEST .96 4.2.1 Descriptive statistics .96 4.2.2 Correlation analysis 100 4.3 COMPARISON OF AGENCY COST OF TWO GROUPS OF ENTERPRISES .102 4.3.1 Comparison of agency cost of two groups of enterprises 102 4.3.1.1 Graph illustration 102 4.3.1.2 Independent sample T-test and Wilcoxon signed-rank test 103 4.3.1.3 Results 104 4.3.2 Summary for the comparison of agency cost of two groups of enterprises .105 4.4 DIFFERENT IMPACT OF AGENCY COST ON FIRM PERORMANCE OF TWO GROUPS OF ENTERPRISES 107 4.4.1 The negative relationship between agency cost and firm performance .107 4.4.1.1 Pooled OLS regression 107 4.4.1.2 Fixed and random effect regression 110 4.4.4.3 Results 113 4.4.2 The different impact of agency cost on firm performance of two groups of enterprises .114 4.4.2.1 Pooled OLS regression 114 4.4.2.2 Fixed and random effect regression 117 4.4.2.3 Results 121 4.4.3 Summary for the different impact of agency cost on firm performance of two groups of enterprises 122 4.5 THE RELATIONSHIP BETWEEN STATE OWNERSHIP AND FIRM PERFORMANCE 124 4.5.1 The negative relationship between state-ownership and firm performance .125 4.5.1.1 Pooled OLS regression 125 4.5.1.2 Fixed and random effect regression 129 v 4.5.1.3 Results 135 4.5.2 The non-linear relationship between state ownership and firm performance 135 4.5.2.1 Pooled OLS regression 135 4.5.2.2 Fixed and random effect regression 138 4.5.2.3 Results 142 4.5.3 Summary for the relationship between state ownership and firm performance 143 4.6 RESULTS FOR CONTROL VARIABLES AND ROBUSTNESS TESTS 144 4.6.1 Results for control variables .144 4.6.2 Robustness tests 146 4.6.2.1 Different proxy for agency cost 146 4.6.2.2 Alternative measure for firm performance .156 4.6.2.3 Other estimation method 160 4.7 CHAPTER SUMMARY 166 CHAPTER 5: CONCLUSION 168 5.1 INTRODUCTION 168 5.2 REVIEW OF RESEARCH QUESTIONS AND DISCUSSIONS 168 5.2.1 Comparison of agency cost of state-owned and non-state-owned enterprises 170 5.2.2 Different impact of agency cost on firm performance of two groups of enterprises 171 5.2.3 Relationship between state ownership and firm performance 173 5.3 IMPLICATIONS 174 5.4 LIMITATIONS 180 PUBLICATIONS………………………………………………………………… …182 REFERENCE…………………………………………………………………………183 APPENDIX A - PRE-ESTIMATION DIAGNOSTIC TESTS…………………….209 A1 ANALYSIS OF THE MULTICOLLINEARITY AMONG INDEPENDENT VARIABLES – VARIANCE INFLATION FACTOR (VIF)…………………… ….209 A2 TEST FOR AUTOCORRELATION IN PANEL DATA…………… 210 A3 TEST FOR HETEROSKEDASTICITY IN PANEL DATA…………………… 210 APPENDIX B – THE DEFINITIONS OF TWO TERMS “STATE-OWNED ENTERPRISES” AND “NON-STATE-OWNED ENTERPRISES”………… ….211 B1 STATE-OWNED ENTERPRISES……………………………………………… 211 B2.NON-STATE-OWNED ENTERPRISES………………………………………….213 vi APPENDIX C: OVERVIEW OF RESEARCH CONTEXT……………………….215 C1 VIETNAM ECONOMY……………………………………………………… ….215 C2 PRIVATIZATION PROCESS………………………………………………… …217 vii LIST OF ABBREVIATION BOD : Board of Director CPI : Customer Price Index FEM : Fixed Effect Model FCF : Free Cash Flow FDI : Foreign Direct Investment GDP : Gross Domestic Product GFC : Global Financial Crisis G&A : General and Administrative GMM : Generalize Method of Moments HOSE : Ho Chi Minh Stock Exchange HNX : Hanoi Stock Exchange Non-SOEs : Non-state-owned Enterprise NPV : Net Present Value OLS : Ordinary Least Squares OTC : Over the counter OECD : Organization for Economic Co-operation and Development POE : Private-owned Enterprises REM : Random Effect Model ROE : Return on Equity ROA : Return on Asset RQ1 : Research question RQ2 : Research question RQ3 : Research question SOE : State-owned Enterprise Upcom : Unlisted Public Company Market VND : Vietnam Dong ... có chứng thực nghiệm ảnh hưởng chi phí đại diện hoạt động doanh nghiệp với diện sở hữu nhà nước cách phân loại thành hai nhóm doanh nghiệp có nguồn gốc nhà nước doanh nghiệp quốc doanh Việt Nam. .. thấy chi phí đại diện doanh nghiệp có nguồn gốc nhà nước cao có ảnh hưởng tiêu cực đến hoạt động doanh nghiệp so với doanh nghiệp không thuộc sở hữu nhà nước Hơn nữa, cấu trúc vốn sở hữu nhà nước. .. 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