The impact of ownership structure and capital structure on firm performance of privatized state-Owned enterprises in Vietnam

Abstract

Privatization of Vietnamese State-owned enterprises is an interesting case in terms of economic development. This study conducts an empirical evidence of privatization and its effects on firm performance. It examines the performance of current privatized SOEs in Vietnam listed on Ho Chi Minh Stock Exchange and Ha Noi Stock Exchange. The study collects the official published information of sampled privatized firms to analyze the relationship between ownership structure, capital structure and firm performance. Based on the result, capital structure is confirmed to have negative effect on performance of privatized firms. In addition, the study also found that State-dominant ownership is positively influenced firm performance, but in contrast to expectation, private-dominant ownership is negatively affected performance. Regarding to the moderating role of dominant ownership structure on the adverse effect of relationship between capital structure and firm performance, private-dominant ownership results a positive effect while there is no evidence to refute the State-dominant ownership’s impact on this relationship. The data collection generally shows an overall picture of current State shares which State shall still control most of large privatized companies. Finally, based on the theoretical analysis and empirical results and existing status of Vietnam’s economy, the study provides some beneficial opinions and recommendations for future researches.