Investment efficiency, state-owned enterprises and privatisation:
Evidence from Viet Nam in Transition
O'Toole, Conor M., Morgenroth, Edgar L.W.ORCID: 0000-0002-9442-0561 and Ha, Thuy Thi Thu
(2016)
Investment efficiency, state-owned enterprises and privatisation:
Evidence from Viet Nam in Transition.
Journal of Corporate Finance, 37
.
pp. 93-108.
ISSN 0929-1199
Our research firstly tests the difference in investment efficiency between state-owned
enterprises (SOEs) and private firms and secondly evaluates the effect of privatisiation 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 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 who 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.