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Corruption and Firm Financial Performance: New Evidence from Vietnam

Huong Vu Van, Tuyen Quang Tran (), Tuan Nguyen and Lim Steven
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Huong Vu Van: Academy of Finance, Hanoi
Tuyen Quang Tran: University of Economics and Business, Vietnam National University, Hanoi
Lim Steven: University of Waikato, New Zealand

Authors registered in the RePEc Author Service: Tuyen Quang Tran () and Tuyen Quang Tran

No 1, Working Papers from Development and Policies Research Center (DEPOCEN), Vietnam

Abstract: Using a nationwide survey of provincial institutional quality and a sample of private manufacturing small and medium scale enterprises (the SMEs), this paper is the first to examine the effects of corruption on financial performance of the Vietnamese private SMEs. Interestingly, contrary to previous findings, the study finds that corruption as measured by a dummy variable does not affect firms’ financial performance after controlling for heterogeneity, simultaneity and dynamic endogeneity. However, we find that the intensity of bribe and many types of corruption have negative impacts on firms’ financial performance. Thus, a typical approach using only a dummy variable of bribe might not adequately evaluate the impact of bribe intensity or even ignored negative impacts of some types of bribe on firms’ financial performance. Our findings imply that anti-corruption measures are necessary to the development of the Vietnamese private SMEs.

Keywords: Corruption; financial performance; SMEs; institutional quality; Vietnam (search for similar items in EconPapers)
Pages: 23 pages
Date: 2017
New Economics Papers: this item is included in nep-eff, nep-ent, nep-sbm, nep-sea and nep-tra
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