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Investment Efficiency, State-Owned Enterprises and Privatisation: Evidence from Vietnam in Transition

Listed author(s):
  • O'Toole, Conor
  • Morgenroth, Edgar
  • Ha, Thi Thu Thuy

Our research tests the difference in investment efficiency between state-owned enterprises (SOEs) and private firms and then evaluates the effect of privatisation and equitisation policies on the investment efficiency of former state owned enterprises (SOEs). We use a novel dataset from Viet Nam which covers large and non-listed SMEs across the construction, manufacturing, and services sectors. Our methodology uses a structural model to test the relationship between Tobin's Q and capital spending. We find no evidence of investment spending being linked to marginal returns by SOEs across all sectors and size classes. However, former SOEs which have been privatised and equitized with a minority state shareholding display positive links between Q and investment. In fact, the link is stronger for these firms than for private firms.

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Paper provided by Economic and Social Research Institute (ESRI) in its series Papers with number WP498.

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Date of creation: Mar 2015
Handle: RePEc:esr:wpaper:wp498
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