Listing and Firm Performance in a Transition Economy

This study aims to provide empirical evidence on the relationship between listing and firm performance in Vietnam. Using a data set of 48 listed and unlisted firms from Thomson Reuter’s data, this research applies pre-post comparison method to evaluate the performance change for listed firms after listing. The research results show that listing on the Vietnamese stock market does not help Vietnamese firms improve their performance; in particular, there is no increase in profitability, operating efficiency and leverage. However, listing helps firms improve their sales and reduce their reinvestment rates. The research results also show that unlisted firms do not improve in firm performance if they are only traded on the Upcom stock exchange. The research results are inconsistent with relevant theories explaining why firms go public in developed countries. Vietnam’s listing delay can also be explained by these results and investors should consider investing in listed firms because these firms improve their sales in the short term. The authors also suggest that the Vietnamese government create policy to encourage firms to list their stocks on the official stock market after equitization.