Luận án tiến sĩ: Chi phí đại diện và hiệu quả công ty nhà nước, tư nhân

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY -------------------- Le Hoang Yen Khanh THE IMPACT OF AGENCY COST ON FIRM PERFORMANCE: A COMPARISON BETWEEN STATE-OWNED AND NON-STATE-OWNED ENTERPRISES LISTED ON VIETNAM STOCK MARKET DOCTOR OF PHILOSOPHY IN ECONOMICS Ho Chi Minh city - 2022 luan an MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY -------------------- Le Hoang Yen Khanh THE IMPACT OF AGENCY COST ON FIRM PERFORMANCE: A COMPARISON BETWEEN STATE-OWNED AND NON-STATE-OWNED ENTERPRISES LISTED ON VIETNAM STOCK MARKET Major: Finance and Banking Reference: 9340201 DOCTOR OF PHILOSOPHY IN ECONOMICS ACADEMIC SUPERVISORS: 1. Pham Phu Quoc 2. Tran Phuong Thao Ho Chi Minh city - 2022 luan an (this page is intentionally blank) luan an i ACKNOWLEDGEMENTS I acknowledge that this submission is my own work and except for the reference, this thesis contains no material previously published or written by other authors. This thesis does not contain material pressed out from a thesis or document presented for any degree or diploma at University of Economics Ho Chi Minh city or other educational institutions.

This research is not the work of mine only but to complete this thesis, I have been benefited from the following people: Firstly, the most important people who set the light on my research from the beginning are my advisors – Dr. Pham Phu Quoc and Dr. Tran Phuong Thao. They are always by my side to support me from initial ideas and then develop the thought into the final research.

Secondly, I would like to express my gratitude to my family members who nurture my passion of higher education, especially, my parents and beloved husband who assist in taking care of me from pregnancy and our newborn baby to accomplish this study. And the last but not least, my managers always stay with me when I have problem and get stuck. They never leave me but provide me with useful solutions to finish my research. Le Hoang Yen Khanh January 2021 luan an ii TABLE OF CONTENT ACKNOWLEDGEMENTS………………………………………….i TABLE OF CONTENT…………………………………………………….………ii LIST OF ABBREVIATIONS………………………………………….vii LIST OF TABLES…………………………………………………….viii LIST OF FIGURES………………………………………………………….xii CHAPTER 1: INTRODUCTION.

PRACTICAL RESEARCH CONTEXT. RESEARCH OBJECTIVES AND QUESTIONS. STRUCTURE OF THE THESIS.15 CHAPTER 2: LITERATURE REVIEW. AGENCY COST AND FIRM PERFORMANCE: THEORY AND EVIDENCE27 2.

Agency cost in business operation. Impact of agency cost on firm performance. Different relationship between agency cost and firm performance in SOEs and non-state-owned-enterprises. Agency cost and firm performance in SOEs.

Agency cost and firm performance in non-state-owned enterprises. Hypotheses for the comparison of agency cost in SOEs and non-stated owned enterprises. Hypotheses for different relationship between agency cost and firm performance. STATE-OWNERSHIP AND FIRM PERFORMANCE: THEORY AND EVIDENCE.

The role of state ownership.55 luan an iii 2. State involvement in listed firms. Hypotheses for the relation between state ownership and firm performance.65 CHAPTER 3: DATA AND METHODOLOGY. Type of data.

Proxies for agency cost. Measures of firm performance. Measure of state ownership. Measure of control variables.80 Gross Domestic Product (GDP) growth rate.81 Consumer Price Index (CPI).81 Country investment growth rate.

General model specification. Methodology for comparison of the agency cost of state-owned firms and non- state-owned enterprises. Model for the comparison of agency cost of two groups of enterprises. Methodology for the different impact of agency cost on firm performance of two groups of enterprises.

Model for the different impact of agency cost on firm performance of two groups of enterprises. Methodology for the relationship between state-ownership and firm performance .89 luan an iv 3. Model for the relationship between state-ownership and firm performance89 3. Different proxies for agency cost.

Alternative measures for firm performance. Other method of estimation.95 CHAPTER 4: EMPIRICAL RESULTS. DESCRIPTIVE STATISTICS AND CORRELATION TEST. COMPARISON OF AGENCY COST OF TWO GROUPS OF ENTERPRISES.

Comparison of agency cost of two groups of enterprises. Independent sample T-test and Wilcoxon signed-rank test. Summary for the comparison of agency cost of two groups of enterprises. DIFFERENT IMPACT OF AGENCY COST ON FIRM PERORMANCE OF TWO GROUPS OF ENTERPRISES.

The negative relationship between agency cost and firm performance. Pooled OLS regression. Fixed and random effect regression. The different impact of agency cost on firm performance of two groups of enterprises.

Pooled OLS regression. Fixed and random effect regression. Summary for the different impact of agency cost on firm performance of two groups of enterprises. THE RELATIONSHIP BETWEEN STATE OWNERSHIP AND FIRM PERFORMANCE.

The negative relationship between state-ownership and firm performance. Pooled OLS regression. Fixed and random effect regression. The non-linear relationship between state ownership and firm performance.

Pooled OLS regression. Fixed and random effect regression. Summary for the relationship between state ownership and firm performance. RESULTS FOR CONTROL VARIABLES AND ROBUSTNESS TESTS.

Results for control variables. Different proxy for agency cost. Alternative measure for firm performance. Other estimation method.

REVIEW OF RESEARCH QUESTIONS AND DISCUSSIONS. Comparison of agency cost of state-owned and non-state-owned enterprises. Different impact of agency cost on firm performance of two groups of enterprises. Relationship between state ownership and firm performance.…182 REFERENCE…………………………………………………………………………183 APPENDIX A - PRE-ESTIMATION DIAGNOSTIC TESTS…………………….

ANALYSIS OF THE MULTICOLLINEARITY AMONG INDEPENDENT VARIABLES – VARIANCE INFLATION FACTOR (VIF)……………………. TEST FOR AUTOCORRELATION IN PANEL DATA……………. TEST FOR HETEROSKEDASTICITY IN PANEL DATA…………………….210 APPENDIX B – THE DEFINITIONS OF TWO TERMS “STATE-OWNED ENTERPRISES” AND “NON-STATE-OWNED ENTERPRISES”…………. STATE-OWNED ENTERPRISES……………………………………………….NON-STATE-OWNED ENTERPRISES………………………………………….213 luan an vi APPENDIX C: OVERVIEW OF RESEARCH CONTEXT……………………….…217 luan an vii LIST OF ABBREVIATION BOD : Board of Director CPI : Customer Price Index FEM : Fixed Effect Model FCF : Free Cash Flow FDI : Foreign Direct Investment GDP : Gross Domestic Product GFC : Global Financial Crisis G&A : General and Administrative GMM : Generalize Method of Moments HOSE : Ho Chi Minh Stock Exchange HNX : Hanoi Stock Exchange Non-SOEs : Non-state-owned Enterprise NPV : Net Present Value OLS : Ordinary Least Squares OTC : Over the counter OECD : Organization for Economic Co-operation and Development POE : Private-owned Enterprises REM : Random Effect Model ROE : Return on Equity ROA : Return on Asset RQ1 : Research question 1 RQ2 : Research question 2 RQ3 : Research question 3 SOE : State-owned Enterprise Upcom : Unlisted Public Company Market VND : Vietnam Dong luan an viii LIST OF TABLES Table 1.1: Share of SOEs’ contribution compared with other economic sectors (2010 – 2017)……………………………………………………………………16 Table 2.1: Empirical evidence on the relationship between state ownership and firm performance…………………………………………….2: Summary of the three research questions and their hypotheses………………………………………………………………….1: Sample selection procedure ……………………………………….2: Number of observations separated by year, industry and ownership structure………………………………………………….3: Variable’s definitions and predicted signs……………….4: Tests and models used in this study………………………………….5: Testing procedures for hypotheses associated with RQ1, RQ2, RQ3…………………………………………………………………………….1: Descriptive statistics of sample size….3: T-test and Wilcoxon signed-rank test for agency cost comparison (Asset turnover ratio)……………………………………………………………………104 Table 4.4: Summary for the comparison of agency cost of two groups of enterprises…………………………………………………………….5: The effect of agency cost (Asset turnover ratio) on firm performance— Pooled OLS regression…….108 luan an ix Table 4.6: The effect of agency cost (Asset turnover ratio) on firm performance— FE regression………………………………………………………………….7: The effect of agency cost (Asset turnover ratio) on firm performance— RE regression……………………………… ……………………….8: The different effect of agency cost (Asset turnover ratio) on firm performance of two groups of companies—Pooled OLS regression………….9: The different effect of agency cost (Asset turnover ratio) on firm performance of two groups of companies—FE regression….10: The different effect of agency cost (Asset turnover ratio) on firm performance of two groups of companies—RE regression…………….

Summary for the different effect of agency cost on firm performance of two groups of enterprises……………………………………………………….12: The relationship between state ownership and firm performance with the interaction of agency cost (Asset turnover ratio)—Pooled OLS regression.13: The relationship between state ownership and firm performance with the interaction of agency cost (Asset turnover ratio)—FE regression …………131 Table 4.14: The relationship between state ownership and firm performance with the interaction of agency cost (Asset turnover ratio)—RE regression…….15: The non-linear relationship between state ownership and firm performance— pooled OLS regression (Asset turnover ratio)……….16: The non-linear relationship between state ownership and firm performance— FE regression (Asset turnover ratio)……… …………….……139 luan an x Table 4.17: The non-linear relationship between state ownership and firm performance— RE regression (Asset turnover ratio)……………………….18: Summary for the relationship between state ownership and firm performance……………………………………………………………….19: The effect of control variables on firm performance during and after global financial crisis………………………………………………………….20: T-test and Wilcoxon signed-rank test for agency cost comparison (G&A Expense ratio)…………………………………………………………………148 Table 4.21: The effect of agency cost (G&A Expense ratio) on firm performance……………………………………………………………………149 Table 4.22: The different effect of agency cost (G&A Expense ratio) on firm performance of two groups of companies…………………………………….23: The relationship between state ownership and firm performance with the interaction of agency cost (G&A Expense ratio)………………………….24: The non-linear relationship between state ownership and firm performance— FE regression (G&A Expense ratio)………………………….25: The effect of agency cost on firm performance—Instrumental variables (GMM) regression…………………………………………………….26: The relationship between state ownership and firm performance— instrumental variable (GMM) regression……………………………………….1: Research questions, related hypotheses and results……………….169 luan an xi LIST OF FIGURES Figure 1.1: Interest rate coverage ratio………………………………………….2: Debt – to – equity ratio…………………………………………….1: Determinants of firm performance…………….2: The horizontal and vertical agency problems in firms with state ownership.3: Agency problem in non-state-owned firms…………………….1: Agency cost of two groups of companies (Asset turnover ratio) ……………………………………………………………………….2: Agency cost of two groups of companies (G&A expense ratio) ……………………………………………………………………….……147 luan an xii SUMMARY Although many studies have concentrated on diverse aspects of agency cost and firm performance, some limitations still exist. Precisely, most previous studies have focused on the impact of ownership structure (management ownership, foreign ownership), free cash flow, and dividend policy on agency cost (Alabdullah, 2013; Alfadhl, 2013; Trinh, 2017) and paid attention to determinants of firm performance such as capital structure, board structure, and corporate governance (Ciftci and Tatoglu, 2019). Furthermore, there is limited empirical evidence on the influence of agency cost on firm performance with the present of state-ownership, which is categorized into two groups of originally state-owned and non-state-owned enterprises. Since Vietnam has been in the process of equitization, the dominant role of state-owned-enterprises has been replaced by the emerging position of the private sector, which places the government in a dilemma of how to allocate scarce national resources between the two sectors for optimal economic development.

Moreover, several theories and studies have examined the impact of state ownership. However, empirical evidence shows mixed and conflicting outcomes as well as illustrates that this relationship is subject to precise situations (Konings, 1997; Lin, Ma, and Su, 2009; Tran et al. Therefore, the objective of this study is to examine the impact of agency costs on firm performance of two groups of enterprises and the influence of state ownership on firm performance in a typical transitional country like Vietnam. Therefore, the study uses panel data of non-financial listed companies on the Vietnam stock market from 2008 to 2020 and employs pooled ordinary least squares (OLS), fixed effect model (FEM), and random effect model (REM) together with the instrumental variable generalized method of moments (GMM) for analyzing data as well as confirming and strengthening the research outcomes.

luan an xiii The research findings show that agency costs in originally state-owned firms are higher and have a more negative effect on firm performance than those of non-state- owned firms. Furthermore, the capital structure and state-ownership posit a negative impact on firm performance, while profit growth and country investment have a positive influence on firm performance. The study also figures out the U-shape relation between state-ownership and firm performance. Key word: Agency cost, state-ownership, firm performance, listed firms, Vietnam.

luan an xiv TÓM TẮT Mặc dù nhiều nghiên cứu đã tập trung vào các khía cạnh đa dạng của chi phí đại diện và hiệu quả hoạt động của doanh nghiệp, nhưng một số hạn chế vẫn còn tồn tại.