The Firm Performance and State ownership - The case of comparison between state owned enterprises and Non-State owned enterprises
Abstract
The privatization is one of the top strategies which the state manipulates in the
international economic integration. This trend aims at attracting more strategic
shareholders from non-state sectors. However, state enhances maintaining the
decisive ownership in the key industries to control the economy. This raises a
question in case of Vietnam, specifically Ho Chi Minh stock exchange, which
structure performs better between state owned enterprises and non-state owned
enterprises.
After applying the researching procedure, no unforeseen result is indicated. Firstly,
there is a significantly negative relationship between state ownership and firm‟s
profitability which is representative for operating performance. This argument is
generated from inefficiency of state owned enterprises, weakly competitive ability,
slaking of monitoring, and heavily asymmetric information. Secondly, this thesis
claims that there is insignificantly negative relationship between state ownership and
price-to-book ratio which symbolizes the financial performance. As the result from
the market asymmetric information combining to lacking of analyze skills and
financial knowledge, the herd and fearing mentalities arise. Hence, it drives the stock
price away from its book value as well as minimizes the influences on financial
performance. This result is normally conducted in developing countries