Government Ownership and Firm Performance: The Case of Vietnam(*) - PowerPoint PPT Presentation

1 / 26
About This Presentation
Title:

Government Ownership and Firm Performance: The Case of Vietnam(*)

Description:

Title: Theory of the firms: Managerial behavior, agency costs and ownership structure Author: Tranchau Last modified by: KIET NGUYEN Document presentation format – PowerPoint PPT presentation

Number of Views:95
Avg rating:3.0/5.0
Slides: 27
Provided by: Tranc150
Category:

less

Transcript and Presenter's Notes

Title: Government Ownership and Firm Performance: The Case of Vietnam(*)


1
Government Ownership and Firm Performance The
Case of Vietnam()
  • Ngo My Tran
  • Walter Nonneman
  • Ann Jorissen

()Ngo, M.T, Nonneman, W., Jorissen, A. (2014)
Government ownership and firm performance The
case of Vietnam, International Journal of
Economics and Financial Issues, 4(3) 628-650
March 2015
2
Outline
  • Context and rationale
  • Contribution
  • Theoretical model and propositions
  • Data and methodology
  • Empirical results
  • Conclusion

3
Context and rationale
  • The Vietnamese Government keeps a substantial
    stake
  • Policy and scholarly debate on the effect of
    partial state ownership on firm performance
  • The extensive empirical literature is
    inconclusive
  • Few theoretical modelling efforts on the effect
    of partial government ownership on firm
    performance
  • No research for Vietnam on the effect of partial
    state ownership on firm performance

4
Research question
  • Does the degree of government ownership matter
    for firm performance?

5
Two ways of analyses
  • Theoretical by extending a game theoretic model
    of government versus management of Huang and
    Xiao (2012) to derive propositions on effects of
    partial government ownership on firm performance.
  • Empirical by estimating a dynamic econometric
    model (using system GMM) based on a panel of
    partially privatized Vietnamese firms (2004-2012)
    to determine the effect of the degree of
    government ownership on firm performance.

6
Contribution
  1. Expand the theoretical predictions of Huang and
    Xiao (2012) and provide empirical evidence for
    these propositions.
  2. Shedding more light on the effect of government
    ownership on firm performance in transition
    economies.
  3. Being valuable to evaluate the effects of the
    privatization policies of the Vietnamese
    government

7
Theoretical model Huang and Xiao (2012)
  • Main reasoning the net effect of the helping
    hand and the grabbing hand of government
    ownership in the firms
  • Helping hand more government ownership
    brings, higher capital subsidy for the firm (i.e.
    debt guarantee, business connection...).
  • Grabbing hand the firms profit will be
    extracted by the government, proportional to its
    shareholding (i.e. excessive employment (Shleifer
    and Vishny, 1994) excessive production (Bai et
    al., 1997) or resource tunneling (Johnson et al.,
    2000)

8
Theoretical model
  • A two-period Stackelberg game between the
    government and the firm
  • The governments maximization problem
  • Assumption wr1, t0, 0ltaßlt1, cgt0 and g(a)
    ar
  • The managers maximization problem
  • Assumption wr1, t0, 0ltaßlt1, cgt0 and b(a)
    na, ngt0

(1)
(2)
(3)
(4)
9
Propositions of Huang and Xiao (2012)
  • Sales per employee
  • Profits per employee
  • Return on sales

10
Further develop some propositions
  • Proposition 1 The efficient use of labor of the
    firm, as measured by value added per employee, is
    negatively affected by government ownership
  • Proposition 2 The efficient use of capital of
    the firm, as measured by turnaround indicator or
    sales over assets, is negatively affected by
    government ownership

11
Further develop some propositions (tt)
  • Proposition 3 The profitability of the firm, as
    measured by return over assets, is negatively
    affected by government ownership
  • Proposition 4 The profitability of the firm, as
    measured by return on equity, is negatively
    affected by government ownership

12
Data for empirical test of the model
  • Panel data extracted from the annual business
    surveys of the Vietnamese General Statistics
    Office for the period 2004-2012
  • Extracting those firms having some degree of
    state ownership (0ltalt1)
  • Firms with values deviating more than three
    standard deviations from the mean were removed.

13
(No Transcript)
14
Econometric models
  • Pooled OLS model
  • Random effects model
  • Dynamic panel data model

15
State ownership and the percentage of government
control by year
16
State ownership and the percentage of government
control by industry and size
17
The estimates of pooled models
18
The estimates of pooled models
19
Graph of firm performance indicators for large-,
medium- and small-size firms (pooled models)
20
The estimates of pooled models
21
Graph of firm performance indicators for large-,
medium- and small-size firms (pooled models)
22
The estimates of dynamic panel data models
23
The estimates of dynamic panel data models
24
Graphical presentation (dynamic models)

25
The estimates of dynamic panel data models
26
Graphical presentation (dynamic models)
27
Key findings
  • Theoretical analysis based on the modified
    HX-model predicts negative effects of the extent
    of government ownership on profitability and on
    efficient use of capital and labor
  • Empirical analysis (dynamic panel estimates)
  • Profitability and labor productivity suffers
    with more extensive government ownership (concurs
    with the theoretical predictions from the
    modified H-X model).
  • Yet, an extensive stake of government in large
    sized firms might positively affect firm
    performance.

28
  • Thank you very much for your listening!
  • Welcome all your comments!
Write a Comment
User Comments (0)
About PowerShow.com