THE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISES

THE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISESTHE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISESTHE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISESTHE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISESTHE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISESTHE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISESTHE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATEOWNED ENTERPRISES

VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY UNIVERSITY OF ECONOMICS AND LAW NGUYEN VAN TAN THE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATE-OWNED ENTERPRISES DOCTORAL DISSERTATION IN ECONOMICS Ho Chi Minh City, 2022 VIETNAM NATIONAL UNIVERSITY HO CHI MINH CITY UNIVERSITY OF ECONOMICS AND LAW NGUYEN VAN TAN THE IMPACT OF EQUITIZATION ON FIRM PERFORMANCE: EVIDENCE FROM VIETNAMESE STATE-OWNED ENTERPRISES Major: Finance – Banking Major code: 62340201 Reviewer 1: Assoc Prof Dr Nguyen Anh Phong Reviewer 2: Assoc Prof Dr Nguyen Hong Thang ADVISOR Assoc Prof Dr Trinh Quoc Trung Double-blind peer review Reviewer 1: Prof Dr Vo Xuan Vinh Reviewer 2: Dr Nguyen Thanh Cuong Ho Chi Minh City, 2022 i DECLARATION I am Nguyen Van Tan, declare that this Ph.D dissertation entitled “The impact of equitization on firm performance: Evidence from Vietnamese state-owned enterprises” is my own work under supervision from Assoc Prof Dr Trinh Quoc Trung - University of Economics and Law, VNU-HCM, Ho Chi Minh City, Vietnam The dissertation contains no material that has been submitted previously, in whole or in part, for the award of any other academic degree or diploma Ph.D Student Nguyen Van Tan ii ACKNOWLEDGMENTS The author would like to express special thanks to Assoc Prof Dr Trinh Quoc Trung - University of Economics and Law, VNU-HCM, Ho Chi Minh City, Vietnam, for his valuable advice to finish this dissertation The author also would like to show sincere respect to the doctoral approval committee, leaders, and lecturers from the finance and banking faculty for their valuable feedback and generous support The dissertation cannot be finished without valuable advice and international privatization data from Prof William L Megginson - the University of Oklahoma’s Michael F Price College of Business and Prof Jay Ritter - the University of Florida, Warrington College of Business iii CONTENTS DECLARATION i ACKNOWLEDGMENTS ii CONTENTS iii LIST OF ABBREVIATIONS viii LIST OF TABLES ix LIST OF FIGURES xi ABSTRACT xii Chapter INTRODUCTION 1.1 Problem statements 1.2 Background of the research 1.3 Research objectives 1.3.1 General research objectives 1.3.2 Specific research objectives 1.4 Research questions 10 1.5 Research object and research scope 10 1.5.1 Research object 10 1.5.2 Scope of the study 10 1.6 Research methodology and data 11 1.6.1 Research methodology 11 1.6.2 Data 12 1.7 New contribution 13 1.7.1 In the theoretical aspect 13 1.7.2 In the practical aspect 14 1.8 The research framework 15 1.9 Structure of the dissertation 15 Chapter THEORIES AND EMPIRICAL STUDIES ON EQUITIZATION AND FIRM PERFORMANCE 17 2.1 Definitions of privatization/ equitization and firm performance 17 iv 2.1.1 Definitions of state-owned enterprises 17 2.1.2 Privatization/ equitization 19 2.1.3 Firm performance 26 2.2 Relevant theories 28 2.2.1 Privatization theories 28 2.2.2 Underpricing theories 35 2.2.3 Listing related theories 36 2.3 Empirical Evidence 37 2.3.1 The impact of privatization/equitization on firm performance of privatized/equitized state-owned enterprises compared with non-participating stateowned enterprises 37 2.3.2 The impact of equitization on firm performance of equitized state-owned enterprises compared with non-equitized state-owned enterprises by average state ownership rates after equitization 44 2.3.3 The impact of equitization on firm performance of equitized state-owned enterprises compared with non-equitized state-owned enterprises according to industry groups 46 2.3.4 Incentive policies for privatization programs and firm performance differences between listed and unlisted firms 49 2.3.5 Underpricing when firms go public 53 2.4 Research gaps 56 2.5 Summary of chapter 60 Chapter METHODOLOGY, DATA AND RESEARCH MODELS 61 3.1 Hypothesis development 61 3.1.1 The impact of equitization on firm performance of equitized state-owned enterprises compared with non-equitized state-owned enterprises 61 3.1.2 The impact of equitization on firm performance of equitized state-owned enterprises compared with non-equitized state-owned enterprises by average state ownership rates after equitization 64 v 3.1.3 The impact of equitization on firm performance of equitized state-owned enterprises compared with non-equitized state-owned enterprises according to industry groups 65 3.1.4 The impact of tax incentives on firm performance and firm performance differences between listed and unlisted firms after equitization 66 3.1.5 Underpricing of equitized state-owned enterprises through the initial public offering 70 3.2 Research models 73 3.2.1 Research model to examine the impact of equitization on firm performance changes of equitized state-owned enterprises compared with non-equitized stateowned enterprises 73 3.2.2 Research model to evaluate how tax incentives and listing affect firm performance changes 75 3.3 Variable measurement 78 3.3.1 Variable description to examine the impact of equitization on firm performance changes of equitized state-owned enterprises compared with nonequitized state-owned enterprises 78 3.3.2 Variable description to evaluate how tax incentives and listing affect firm performance changes 82 3.3.3 Variable description for underpricing 85 3.4 Data collection and description 87 3.4.1 Data 87 3.4.2 Data collection 89 3.4.3 Data description 89 3.5 Estimation methods 94 3.5.1 Average treatment effect through propensity score matching 94 3.5.2 Ordinary least square 95 3.5.3 t-Test for underpricing phenomenon 96 3.6 Summary of chapter 96 Chapter RESEARCH RESULTS 98 vi 4.1 Firm performance of equitized state-owned enterprises in the pre-post equitization periods 98 4.1.1 Descriptive statistics 98 4.1.2 General firm performance of equitized state-owned enterprises 99 4.1.3 Firm performance changes of equitized state-owned enterprises 101 4.2 Quantitative research results 108 4.2.1 The impact of equitization on firm performance of equitized state-owned enterprises compared with non-equitized state-owned enterprises 108 4.2.2 The different impacts of equitization on firm performance of equitized state-owned enterprises compared with non-participating firms by different average state ownership rates after equitization 111 4.2.3 The different impacts of equitization on firm performance of equitized state-owned enterprises compared with non-participating firms according to industry groups 114 4.2.4 The impact of tax incentives on firm performance changes and firm performance changes between listed and unlisted firms 116 4.2.5 The underpricing phenomenon in the short run and long run 120 4.3 Hypothesis testing 124 4.3.1 Hypothesis on the impact of equitization on firm performance of equitized SOEs compared with non-equitized state-owned enterprises (hypothesis 1) 124 4.3.2 Hypothesis on the impact of equitization on firm performance of equitized SOEs compared with non-equitized state-owned enterprises by average state ownership rates after equitization (hypothesis 2) 125 4.3.3 Hypothesis on the impact of equitization on firm performance of equitized state-owned enterprises compared with non-equitized SOEs according to industry groups (hypothesis 3) 127 4.3.4 Hypothesis on the impact of tax incentives on firm performance and firm performance differences between listed and unlisted firms after equitization (hypothesis 4) 129 vii 4.3.5 Underpricing hypothesis of equitized state-owned enterprises through the initial public offering (hypothesis 5) 130 4.4 Robustness test 131 4.5 Summary of chapter 131 Chapter CONCLUSIONS AND RECOMMENDATIONS 132 5.1 Conclusions 132 5.2 Recommendations 135 5.2.1 Equitization and firm performance of equitized state-owned enterprises compared with non-equitized state-owned enterprises 135 5.2.2 The state deregulation and control 138 5.2.3 The impact of equitization on firm performance changes according to industry groups 142 5.2.4 Incentive policies and listing encouragement 145 5.2.5 Underpricing of equitized state-owned enterprises through the initial public offering 150 5.3 Limitation of the study and suggestions for further research 155 5.4 Summary of chapter 155 LIST OF PUBLICATIONS REFERENCES APPENDICES 18 viii LIST OF ABBREVIATIONS Abbreviation Meaning ATE Average treatment effect DID Difference-in-difference EMPL Total number of employees GDP Gross domestic product HNX Hanoi Stock Exchange HOSE Hochiminh Stock Exchange KPIs Key Performance Indicator IPO Initial public offering LV Leverage MEBOs Management employee buyouts NIEFF Net income efficiency NPM New public management PSM Propensity score matching ROA Return on assets ROE Return on equity ROS Return on sales SAL Real sales SALEF Sales efficiency SEO Seasonal public offering SIE Share issue equitization SIP Share issue privatization SOEs State-owned enterprises SSC The state securities commissions of Vietnam TAS Total asset turnover VND Vietnam Dong VGSO General Statistics Office of Vietnam