The impact of privatisation on firm performance in a transition economy: the case of Vietnam

Dong Loc Truong, Gerrit Jan Lanjouw and Bernardus Wander Lensink
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Bernardus Wander Lensink: Groningen University

No 04C31, Research Report from University of Groningen, Research Institute SOM (Systems, Organisations and Management)

Abstract: The Vietnamese privatisation programme, launched in 1992, differs from usual Western privatisation programmes in terms of the residual percentage of shares owned by the state and the portion of shares transferred to insiders. This begs the question whether these differences influence the effects of the programme on firm performance. This study measures the impact of privatisation on firm performance in Vietnam by comparing the pre- and post-privatisation financial and operating performance of 121 former state-owned enterprises (SOEs).We find significant increases in profitability, sales revenue, efficiency and employee income. In addition, an increase in employment and a decline in leverage of newly-privatised firms is found, although the changes are statistically insignificant. Regression analyses reveal that firm size, residual state ownership, corporate governance and stock-market listing are key determinants of performance improvements.

Date: 2004
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