Government Ownership and Firm Performance: the Case of Vietnam

Year 2014, Volume: 4 Issue: 3, 628 - 650, 01.09.2014

Ngo My Tran Walter Nonneman Ann Jorissen

Abstract

This study extends some predictions from a game theoretical model which evaluates the net effect of government ownership on firm performance and empirically tests these predictions using a panel data of Vietnamese firms in the period 2004-2012. The empirical results estimated from static and dynamic models confirm our propositions of a negative effect of state ownership on firm profitability and labor productivity. Furthermore, this study documents a moderating role of firm size in the relationship between state shareholding and the performance of firms with higher state ownership in larger firms enhancing profitability and labor productivity.

Keywords

government ownership, firm performance, dynamic model and interaction effect