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i
VIETNAM NATIONAL UNIVERSITY – HOCHIMINH CITY
INTERNATIONAL UNIVERSITY
SCHOOL OF BUSINESS
DOMINANT OUTSIDER OWNERSHIP AND
DOMINANT INSIDER OWNERSHIP,
COMPARISION AND IMPLICATIONS.
In Partial Fulfillment of the Requirements of the Degree of
BACHELOR OF ARTS in FINANCE & BANKING
Student’s name: DANG NGUYEN MINH TRANG (BAFNIU10302)
Advisor: LE VINH TRIEN, PH.D.
Ho Chi Minh City, Vietnam
2014
ii
DOMINANT OUTSIDER OWNERSHIP AND
DOMINANT INSIDER OWNERSHIP,
COMPARISON AND IMPLICATIONs.
APPROVED BY: Advisor APPROVED BY: Committee,
________________________ ___________________________________
Le Vinh Trien, PhD. , Chair
___________________________________
, Secretary
___________________________________
THESIS COMMITTEE
iii
ACKNOWLEDGMENTS
This is a pleasure to express my sincere gratitude to all those who made this
thesis possible. First and foremost, I would like to express my deepest appreciation and
gratitude towards Mr. Trien Le, my professional advisor, for his academic guidance and
enthusiastic encouragement throughout the research progress. Without his guidance and
persistent help, this thesis would not have been possible. Mr. Trien Le and his successful
works in the field has also given me the inspiration to come up with the thesis topic and
the motivation to carry on with it despite many obstacles. As busy as he is, Mr. Le was
always able to find times to support me with his meticulous comments and insightful
suggestions. He always listened to me to understand each specific issue with my thesis
and guided me to a direction in which I could “comfortably” excel. I am not sure so many
undergraduate students are given such opportunity to develop their own individuality and
self-sufficiency by being allowed to work with such independence. He has always been
there and gone beyond what I expected from anyone in navigating me towards my
educational goals. The opportunities of working with and learning from you has been an
invaluable experience for my research and my career path. My most sincere thanks and
respect to you, sir, a wonderful advisor.
My heartfelt appreciation also goes to my friends who supported me in my
research work. Discussions with Ms. Uyen Nguyen, my dear friend, have been
illuminating and helpful for my thesis model. I also appreciated all the time and advices
all other friends have given me.
Especially, I owe a very important debt to my marvelous family: my beloved
parents and my little sister who were always there for me emotionally, who always love
and believe in me. They always knew when I was down and cheer me up at the right
time. Their dedication for me is always incomparable. Again, to all of you, thank you for
all of your patient presence and support for me so far.
iv
TABLE OF CONTENTS:
ACKNOWLEDGMENTS ............................................................................................... iii LIST OF TABLES: .......................................................................................................... vi LIST OF FIGURES: ....................................................................................................... vii ABSTRACT: .................................................................................................................. viii ABBREVIATION: ........................................................................................................... ix
Chapter 1 INTRODUCTION: ......................................................................................... 1 1.1. Background of the Research: ............................................................................... 1
1.1.1. Vietnam -a market oriented country with potential: ..................................... 1
1.1.2. Privatization in Vietnam: .............................................................................. 2 1.1.3. Weak Corporate Governance and Ownership context in Vietnam: .............. 3
2.1. Research Rationale: .............................................................................................. 4 3.1. Research objectives: ............................................................................................. 5
4.1. Scope and Limitations: ......................................................................................... 6 5.1. Implications: ......................................................................................................... 6
6.1. Structure of the Research: .................................................................................... 7
Chapter 2 LITERATURE REVIEW: ............................................................................. 8 2.1. Privatization and Equitization in Vietnam: .......................................................... 8
2.2. Classifications of Ownership Structure after privatization in Emerging
Countries: ...................................................................................................................... 12
2.3. Ownership Concentration and Firm Performance, the controversies: ............... 14 2.4. Dominant (Insider/Outsider) Ownership:........................................................... 17
2.5. Agency Theories Framework for Privatization in Emerging Economies
(Dharwadkar et al., 2000): ............................................................................................ 19
2.6. Hypothesis development: ................................................................................... 21
Chapter 3 METHODOLOGY: ...................................................................................... 23 3.1. Research design: ................................................................................................. 23
3.2. Sampling method and Sample size: ................................................................... 24 3.3. Data collection procedure: ................................................................................. 26 3.4. Research model: ................................................................................................. 27
3.4.1. Regression model: ....................................................................................... 27
3.4.2. The variables: .............................................................................................. 27
3.4.2.1. Dependent variables: ........................................................................... 27
3.4.2.2. Independent variables: ......................................................................... 28
3.4.2.3. Control variables: ................................................................................ 29
Chapter 4 DATA ANALYSIS AND RESULTS: ......................................................... 31 4.1. Descriptive analysis: .......................................................................................... 31 4.2. Correlation analysis: ........................................................................................... 32
4.3. Regression results:.............................................................................................. 36
v
4.3.1. Testing linear regression with ROA as dependent variables (Test 1):........ 36 4.3.2. Testing linear regression with ROE as dependent variables (Test 2,
confirmation test): ..................................................................................................... 38
Chapter 5 CONCLUSIONS AND RECOMMENDATIONS: .................................... 40 5.1. Results Discussions and Conclusions: ............................................................... 40 5.2. Limitations, Recommendations and Conclusions: ............................................. 45
5.2.1. Limitations: ................................................................................................. 45 5.2.2. Conclusions: ................................................................................................ 46
REFERENCES: .............................................................................................................. 48 APPENDICES: ................................................................................................................ 54
vi
LIST OF TABLES:
Table 1: Post-privatization Ownership Structures in Emerging Economies as a Function
of Ownership Type and Ownership Concentration .......................................................... 13
Table 2: Summary of Research Design ............................................................................ 23
Table 3: Industry Description ........................................................................................... 25
Table 4: Summary of three variable types ........................................................................ 30
Table 5: Descriptive analysis for variables (not dummy) ................................................. 31
Table 6: Correlation analysis of regression variables ....................................................... 34
Table 7: Results of regression analysis for ROA during three years 2010, 2011, and 2012.
........................................................................................................................................... 36
Table 8: Results of regression analysis for ROE during three years 2010, 2011, and 2012.
........................................................................................................................................... 38
vii
LIST OF FIGURES:
Figure 1: GDP Growth rate of Vietnam (2009 - 2013) ....................................................... 2
Figure 2: Ownership structure of Equitized SOEs .............................................................. 4
Figure 3: Number of equitized SOEs from 1992 to 2011 ................................................. 11
Figure 4: Agency Theory Framework for Privatization in Emerging Economies ............ 19
Figure 5: Ownership structure of all samples from 2010 to 2012. ................................... 32
viii
ABSTRACT:
This study examines the relationship between Dominant Insider Ownership and
Dominant Outsider Ownership and firm performance using pooled data for Vietnamese
listed non-financial companies over the period of three years 2010 – 2012. Empirical
results show that both Dominant Insider Ownership and Dominant Outsider Ownership
present positive relationship with firm performance. However, the Dominant Insider
Ownership, containing a remarkable number of State Ownership, still has more positive
influence on firm performance than Dominant Outsider Ownership.
ix
ABBREVIATION:
DIO Dominant Insider Ownership
DOO Dominant Outsider Ownership
NDO Non-dominant Ownership
SOE State-owned Enterprise
CG Corporate Governance
MOF Ministry of Finance
OECD Organization for Economic Co-operation and Development
HOSE Ho Chi Minh Stock Exchange
HNX Hanoi Stock Exchange
GDP Gross Domestic Product
IMF
International Monetary Fund
1
Chapter 1
INTRODUCTION:
This part includes the full background of the study and provides rationales for
my conducting this research. Firstly, the background of the study is presented by
summarizing the Vietnam economy outlook, the privatization and corporate governance,
with a focus on the ownership structure context in Vietnam. These reviews will then be
followed by the research rationale and main objectives of the study. With clear objectives
stated, the author would then figure out the research method with its scope and possible
limitations, as well as the implications for relating parties.
1.1. Background of the Research:
1.1.1. Vietnam -a market oriented country with potential:
Vietnam is a promising country with a steady economic growth over recent
years. In the previous three years, GDP growth was maintained at around 5.5% to 6%:
6.42% growth as of 2011, 5.25% and 5.42% as of 2012 and 2013 respectively. Vietnam is
considered as one of the fastest growing emerging markets of Asia (IMF 2010) operating
in the socialist-capitalist dichotomy (Truong, 2013). In other words, Vietnam is a
transitional economy, following a communist regime with the orientation for market-
based competitive environment (market economy).
2
Figure 1: GDP Growth rate of Vietnam (2009 - 2013)
(Source: MOF)
1.1.2. Privatization in Vietnam:
Reforming the entire economy is a process that needs to be done in every
developing countries to enhance the economic growth and firm performance inside such
countries. Some countries started with a clear procedure and specific steps planned, some
just initiate their economic restructuring program with mere improvisation mindset.
Although Vietnam can be considered among the former group, its restructuring program
is still somewhat mixed-up and vague in implications of each step taken. When Vietnam
started to reform the economy after the war, the Central plan-oriented economy was
applied and it turned out to be a huge mistake until “Doi moi” reform program in 1986.
After “Doi Moi”, Vietnamese government started to restructure the entire economy by
transitioning towards market-oriented economy. Privatization is a part of the intended
program since privatization is a common and effective method that has been used by
many developing countries to reform theirs inefficient State-owned Enterprises (SOEs).
For example, privatization has brought success to the economic reform of China (Qi, Wu
5.32
6.786.24
5.25 5.42
0
2
4
6
8
2009 2010 2011 2012 2013
GDP Growth Rate of Vietnam
(2009 - 2013)
GDP Growth Rate (%)
3
and Zhang 1997). However, the process still cannot help China’ SOEs gain significantly
better performance for many reasons, some of which are also challenging Vietnam:
In many transformed SOEs, the State still holds the controlling
vote in making decisions but lacks of expertise and discipline in monitoring of
operation and management. That, combining with initially weak governance
framework, aggravate agency problems in enterprises after privatization
(Dharwadkar et al., 2000)
Privatization efforts in merging economy run risk of expropriation
of major shareholders to minor shareholders (La Porta 1998). In some privatized
firms, owners and managers have close relationship (relatives), so they
manipulate the whole company and disregard the interests of minor shareholders
(In the Law of Enterprise 2005, there is no sanction/ process to protect minor
shareholders’ interests)
Privatization is a trend, yet in Vietnam, it is still gradual, internal, and partial
and has had only minimum effect on ownership structure, as the government has not
provided clear legal and regulatory framework and guidance toward the process and its
outcomes (Vu, 2005).
1.1.3. Weak Corporate Governance and Ownership context in Vietnam:
Corporate Governance (CG) is “Procedure and processes according to which
an organization is directed and controlled” (OECD). According to Vu (2005), Vietnam is
a country with a very weak legal and regulatory system, in a sense that minority
shareholders are not protected adequately.
Ownership structure, considered as an element of CG, has become a major
issue in firms in emerging economies (Phung and Hoang, 2013). In Vietnam nowadays,
ownership restructuring has not received appropriate attention, while ownership structure
have evidenced significant impact on firms’ performance (Akimova and Schwodiauer,
2003; Pham, 2009), and that ownership structure may contributes to the solution of CG
4
problems (Akimova and Schwodiauer, 2003). After privatization, the government
retained ownership in 57% of equitized firms (Vu, 2012).
Figure 2: Ownership structure of Equitized SOEs
(Source: MOF)
Above is a brief overview on the Vietnam economy, Corporate Governance
and ownership structure context in Vietnam. We now attempt to examine which
ownership structure is suitable the most for Vietnamese listed firm in the post-
privatization context: dominant insider ownership structure or dominant outsider
ownership structure with the expectation that dominant outsider ownership structure the
more beneficial structure for the firm (Dharwadkar et.al. 2000).
2.1. Research Rationale:
From the background above, post-privatization ownership structure may be
one of the leading subjects for discussion recently in Vietnam. The purpose of the
Government is transforming the SOEs, especially their ownership structure, through
privatization, so it is understandable that the major ownership structure are outsider or
insider, dominant or dispersed are in the State’s will, the consequences of the
Government’s policy. Our neighbor and also an emerging country, China, has
57%
14%
29%
Ownership structure
State Employees Outsiders
5
transformed the economy without reforming the political system, so the Chinese
government still retains dominant ownership in majority of privatized firms (Le and
Chizema, 2011). Providing the distinctive and similar economic and political context of
Vietnam, we may expect that after privatization, the State would be dominant (insider)
owner in the privatized firms. Adding this specific reason, studying on the impact of
dominant insider ownership is necessary to evaluate the effectiveness of this type of
privatization, in comparison with dominant outsider ownership. Thus, this study leads to
the references and implications for policy-makers, as well as the enterprises themselves,
to adjust the intending ownership structure to better suit the Vietnamese context and
enhance the firm operating and financial performance.
3.1. Research objectives:
With the rationale clearly defined, after examining the relationship between
dominant outsider ownership structure and firm performance comparing to that of
dominant insider ownership structure, we attempt to provide the firms with answers on
which kind of ownership structure is rather beneficial for firms in the Vietnam economic
context (economic transition period). The research was conducted in the consideration of
the restructure path of other socialist-capitalist countries such as China (Lin, 2004) which
can be regarded as a mixed example to which ownership structure is more applicable and
suitable in the context of Vietnam then be suggested. Hence, the main objectives of the
study are:
• To explain the effects on firm performance of dominant outsider
and dominant insider ownership structure in a conceptual view.
• To evaluate the effect of dominant outsider ownership (DOO)
structure and dominant insider ownership structure on the firm performance after
privatization (across industries and time panel of 5 years).
6
• To find out the effect of dominant insider ownership (DIO)
structure/ outsider ownership structure on firm performance (measured by ROA,
ROE, etc.) in each industry.
• To further explain and suggest which one of the two structures is
more suitable for the Vietnamese listed firms.
4.1. Scope and Limitations:
The research would only focus on the Vietnamese privatized listed firms on
two official stock exchanges (HOSE and HNX) only. There are several limitations
regarding the scope of the study:
Firstly, the economic situation in Vietnam – a developing country with
incomplete Corporate Governance framework makes it hard for scholars to apply the
known theories (originated and applied in developed countries) relating to the problem
to the listed firms in Vietnam. Secondly, time limited as the time for conducting the
research is approximately four months, not long enough to cover all of the issues of the
dominant outside and insider ownership structure in a country. Finally, data discrepancy
is also a problem as the data presented in online sources may not be the most accurate
one, not mentioning that those data also varies across different sources. The author chose
the most reliable sources that may exist (according to their online view and
recommendations from other instructors and fellows). Discrepancy is still unavoidable
but may not affect the result in any significant ways.
5.1. Implications:
Restructuring the economy is a process with specific steps that needs to be
monitored closely. However, in Vietnam, this process has not been valued at appropriate
level with only fragmented actions rather than systematic guidelines and procedures.
Privatization is also part of the scene and ownership structure is one of the foremost areas
need to be examined carefully when restructuring the Vietnam Corporate Governance
scheme specifically, and the economy generally. Thus, conducting the study on which
7
ownership structure is suitable for the firms in transitional economy in Vietnam with a
close look on the dominant outsider ownership and dominant insider ownership is
therefore the initial job of the author. In addition, the expecting dominant outsider
ownership to have a stronger positive impact than dominant insider ownership on firm
performance would facilitate our further discussion on how to improve the performance
of Vietnamese listed firms.
6.1. Structure of the Research:
This thesis includes five main parts, presented in five chapters. Chapter I:
Introduction is to brief the context and reasons for the research; hence point out the main
objectives and problems to be solved in the research. Moreover, this part also summarizes
the scope, limitations, as well as the research’s significance to the author and the other
related parties. Finally, it also presents the overall structure of the research. The second
chapter reviews the main concepts and definitions used in the research. It also
summarizes the former studies of other researchers, as well as the theories and model
relating to the problems stated in Chapter I, which could be used to apply in the research.
Inspired by the theories in the previous chapter, Chapter III: Methodology, would
develops the hypotheses for the research and presents the various methods and process
applied in the research from collecting data to building the scale and evaluate the data to
be collected. Chapter IV: Data analysis and results would then present the results of the
tests on the research regression model. The last chapter, chapter V: Conclusions and
Recommendation would further discuss and explain the results retrieved from the tests,
hence give suggestions for improving the model, the Ownership structure of privatized
firms in Vietnam, as well as the insights for others relating studies.
8
Chapter 2
LITERATURE REVIEW:
This part includes the review of the definitions, theories, and general trends
that have been published relating to the topic of insider ownership and outsider
ownership in the Vietnamese privatization context. Firstly, the author would summarize
the meaning of privatization and its process in a standard developed economic
framework and in the emerging economic one. Secondly, I would present the types of
ownership structure existing in the Vietnamese firms and explain the classification of
outsider ownership and insider ownership. Then the author would review some findings
on the effect of ownership concentration on firm performance in several countries.
Finally, the author would review some theoretical models that have been well recognized
in evaluating the effects of the ownership structure on the firm performance, as well as
some previous studies on comparing performance of firms employing the dominant
insider ownership structure with firms employing dominant outsider ownership structure.
In this study, outsider ownership structure is assumed better than insider structure for
Vietnamese firms.
2.1. Privatization and Equitization in Vietnam:
Privatization is the transformation of State Ownership into new types of
ownership structures (Dharwadkar et al. 2000). The term “equitization” is used to define
SOEs that has been restructured to Joint-stock Companies of which shares are publicly
traded in stock exchanges (Truong, Nguyen, and Nguyen, 2007). Therefore, a “privatized
firm”, not until being listed in stock exchanges, cannot be called an “equitized firm”.
9
However, a “privatized firm” and an “equitized firm” are almost the same in nature, all of
the theories and models that are developed for privatized firms could be applicable for
equitized firms. Moreover, the research we are conducting is dealing with the listed
companies in Vietnam. Hence, in this research, the term “privatization” might be used
interchangeably with the term “equitization”.
According to Vu (2005), there are essentially four stages of equitization as
following:
Stage one (6/1992 – 4/1996): Voluntary Equitization:
According to the Decision 202-CT, the pilot equitization program was
launched in June 1992, while there were 6,500 SOEs in Vietnam. The target companies
of this Decision were small or medium-sized, and profitable or potentially profitable, but
not strategically critical ones. Additionally, the employees and employers of those SOEs
were encouraged to join the pilot program by buying the companies’ shares with
concessionary terms. During five-year period of pilot program, only five SOEs were
equitized.
Stage two (5/1996 – 5/1998): The Expansion Stage of the Pilot Program:
The result of the first stage had indicated that the government needed a more
effective approach. On 7 May 1996, the Decree No. 28-CP of the Government on the
transformation of a number of state enterprises into join-stock companies was issued
marking the second stage of equitization process. The general provisions were maintained
unchanged, while the scope of equitization was extended to companies that meet the
conditions: “(i) having a small and medium size, (ii) not belonging to the enterprises in
which the State needs to own 100% of the investment capital, (iii) having an effective
business plan” (Article 7 – Decree No.28-CP). Although the Government had shown their
strong commitment to equitization, the outcome did not meet the expectations. From
1996 to 1998, there were only 25 more SOEs joining equitization.
Stage three (6/1998 – 5/2002): The acceleration of the Equitization Program:
10
On 29 June 1998, the Decree No.44/1998/ND-CP was launched to implement
for the equitization process in Vietnam. The subjects were defined and stated clearer in
the list of three categories of SOEs to be selected for equitization, including: “(i)
Strategic SOEs shall not be equitized yet, such as those SOEs in which the State holds the
monopoly power: explosives, radioactive substances, printing of bank notes, and etc…
(ii) SOEs where the State needs to hold prevailing or special shares when the equitization
is carried out: public-utility State enterprises with the State's capital of over 10 billion
VND, exploitation of precious and rare ores, large-scale production of nonferrous and
precious and rare metals… (iii) Other SOEs in which the State does not need to hold
prevailing or special shares may all be equitized ” (Appendix “List of categories of state
enterprises to be selected for equitization”, Decree No.44/1998/ND-CP of June 29, 1998).
The result from this stage was impressive with 845 additional SOEs, therefore there had
been 875 SOEs equitized by May 2002.
Stage four (2002 – present): The Continuing of Equitization Program:
Although Decree No.44/1998/ND-CP had brought success, still it had some
drawbacks such as the valuation method of target firms to be equitized. Therefore, the
Government had issued Decree No. 64/2002/ND-CP of June 19, 2002 to replace Decree
44 stating, “All previous regulations on equitization which are contrary to this Decree
shall be no longer effective” (Article 34, Decree No. 64/2002/ND-CP of June 19, 2002).
Decree 64 had speeded up the equitization process. As a result, from 2003 to 2004 there
were 1,292 SOEs participating in equitization. It was projected that there would be 3,000
SOEs converted into equitized firms by 2005. However, with such slow progress, it was
hard to meet the Government’s goal at that time. On 16 November 2004, Decree No.
187/2004/ND-CP was issued to replace the Government's Decree No. 64/2002/ND-CP of
June 19, 2002 and took effect 15 days after its publication in the Official Gazette. Decree
187 had a clear guidance for applying evaluation to SOEs to be equitized based on the
market value. Moreover, it helps solve the problems relating to SOE’s bad debts. From
2002 to 2011, the institutional framework for SOEs reform has been established, clearing
11
road for speeding the equitization process. According to Vu (2012), at the end of 2011,
roughly 4000 SOEs has been reformed. From 2012 to the very near future 2015, Decision
No. 929 on the 2015 period states that each ministry, line-ministry, province, state
corporation and economic group is required to submit its own reform project to the Prime
Minister for approval by the third quarter of 2012. According to current plans, nearly 900
SOEs will be restructured and equitized in the 2012-2015 period (OECD, 2013). Up to
now, more than 5000 SOEs have been reformed (Vu, 2012)
Figure 3: Number of equitized SOEs from 1992 to 2011
(Source: MOF)
Equitization until now may not have the strongest impact it should on firm
performance in Vietnam. Equitization is to convert both the ownership structure of the
economy and the corporate governance of firms. However, in Vietnam, the ownership
structure of the economy has not been changed effectively.
588 5881094
1715
2571
33843743 3859
0506
621
856
813
359116 117
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1992-2000 2000-2002 2003 2004 2005 2006 2007 2008-2011
Number of equitized SOEs
Increase in number of equitized SOEs
Total number of privatized SOEs from previous period
12
2.2. Classifications of Ownership Structure after privatization in Emerging
Countries:
Ownership structure is measured by the percentage of shares that each type of
owners holds in a company. From a firms’ perspective, ownership structure determines
the firms’ profitability, enjoyed by different stakeholders. In particular, ownership
structure is an incentive device for reducing the agency costs associated with the
separation of ownership and management, which can be used to protect property rights of
the firm (Barbosa and Louri, 2002).
After the privatization process, the major type of ownership for the company
varies among different countries. For instance, State remained holding controlling shares
in the firm after privatization is a common fact in China, while the stories might be in
reverse for European countries (Le and Chizema, 2011). As for the case of emerging
countries like Vietnam, there are essentially six types of ownership structures being
recognized (Dharwadkar et al. 2000), which is: (1) foreign investors, (2) local
institutional investors, (3) local individual investors, (4) managers, (5) employers, (6) the
State (DeCastro & Uhlenbruck 1997, Djankov 1998, 1999; Filatotchev, Hoskisson, Buck,
& Wright 1996; Wright et al. 1998). There are different dimensions Dharwadkar et al.
2000 used to categorize those six types of ownership. First, six types of ownership are
classified based on the involvement-after-privatization criteria: outsider ownership and
insider ownership, of which outsider owners did not associate with the firm before the
privatization but insider owners did and then continued their involvement in the firm after
privatization. Another dimension used to classify ownership type according to
Dharwadkar et al. 2000 is based on the ownership concentration: dominant ownership
and distributed ownership, of which dominant owners holds greater than 50% of the
firm’s equity while the distributed owners refers to many dispersed minority owners.
With respect to the first dimension, outsider owners are (1) foreign investors, (2) local
institutional and (3) local individual while insider owners are (4) managers, (5)
employers, (6) the State. Combining two dimensions abovementioned, we would have the
13
overview on the nature of dominant insider ownership (DIO) and dominant insider
ownership (DOO) structure in emerging economies. The table below summarizes the
characteristics of DIO and DOO:
Table 1:
Post-privatization Ownership Structures in Emerging Economies as a Function of
Ownership Type and Ownership Concentration
Ownership type Ownership Concentration
Dominant Distributed
Outsider Dominant Outsider Ownership Distributed Outsider
Ownership
• Foreign
investors
• Local Institution
investors
• Local Individual
Investors
There is one dominant outsider
ownership type that possesses
equity controlling interest.
Within this type of ownership,
equity is concentrated in the
hands of one entity.
There are multiple outsider
ownership types that possess
equity.
Within each ownership type,
equity is concentrated in the
hands of one entity.
Insider Dominant Insider Ownership Distributed Insider Ownership
• Managers
• Employees
• The State
There is one dominant insider
ownership type that possesses
equity controlling interest.
Within this type of ownership,
equity may be concentrated in
the hands of several entities.
There are multiple insider
ownership types that possess
equity.
Within each ownership type,
equity is distributed among
several entities (Tian & Estrin,
Retained State Shareholding in
Chinese PLCs: Does
Government Ownership
Reduce Corporate Value?,
14
2005).
(Source: Dharwadkar et al., 2000)
All of the types of ownership in each DIO and DOO structure are easy to
capture the nature of ownership apart from State ownership, especially after privatization.
Decree No. 09/2009/ND-CP dated February 5, 2009 of the Government promulgating the
Regulation on financial management of state companies and management of state capital
invested in other enterprises has clearly explained the terms state ownership. State
ownership refers to State capital invested indirectly from other SOEs or directly from
Government agencies. For example, State Capital Investment Corporation (SCIC) is one
of the biggest agencies represents the government capital management in privatized
SOEs. Regarding the nature of ownership, State is technically classified as an outsider in
developed countries. However providing the privatization context of merging economy
where the State has long history of involvement in SOEs before privatization, it should be
in the insider owner category.
2.3. Ownership Concentration and Firm Performance, the controversies:
Ownership concentration refers to the amount of stock owned by individual
investors and large-institutional investor (investors that hold at least 5 per cent of equity
ownership within the firm). According to Dharwadkar et al., 2000, a more than 50%
ownership of equity is considered as dominant ownership. A higher level of ownership
concentration suggest a stronger monitoring power from investors over a firm’s
managerial decisions because of the incentives from these owners to guarantee the
profitability of their investment. The more concentrated the ownership is, the more voting
power granted for the owners. They can even replace the management board if they see
them poorly perform. Thus, ownership concentration could be an internal governance
mechanism to help prevent the possibility of principal – agent problems between
managers and shareholders, specifically dominant shareholder. However, the main
15
agency problem here turns in to another relationship: between the shareholders. The
dominant shareholder may make decisions favorable for themselves at the cost of the
minority shareholders, which is called expropriation of minority shareholders. This
expropriation and likelihood of firm value deterioration may be worse in the scene that
the major shareholders appoint their family members to the executive positions in the
enterprise. But, again, from another point of view, large shareholders have power and
stronger incentive to ensure shareholder value maximization (Jensen and Meckling, 1976;
Zeckhouser and Pound, 1990)
We can see that many researchers have conducted various studies on the
subject of relationship between ownership concentration and firm performance in many
developed and emerging economies. This part would review some findings on the matter
in both developed and emerging, but mostly in emerging economies, our research
context.
There are some negative impact of the concentration ownership such as: (1)
large shareholders can influence corporate decisions directly, maximize their own value,
lead to expropriation of minor shareholders, (2) raised cost of capital due to lower market
liquidity or decreased diversification opportunities on part of investors (Fama and Jensen
1983). Those negative impacts may be worsen in the context of emerging economy where
large strategic investors are the major players on the corporate governance scene
(Bergloef and von Thadden, 1999).
Some of the other researchers may find concentration ownership more
favorable. For example, there is a positive and significant correlation between ownership
concentration and profitability for Chinese listed firms (Xu and Wang, 1997) or there is a
positive impact of concentration of outsider ownership on firm productivity for Russian
firms soon after its voucher privatization (Earle, 1998). In another research on listed
firms in New Zealand, findings shows that higher ownership concentration in listed
companies in New Zealand leads to higher accounting-based performance (Reddy,
Abidin & He, 2012). The empirical results in Jordan suggest that ownership
16
concentration also impose a positive and significant impact in determining firm
performance (Jaafar and El-Shawa, 2009).
However, the debate went on, as there is also evidence that moderate
concentration is best for firm performance (Kapelyushnikov, 2000). In relating study in
2001, Kuznetsov, Pavel and Muravyev, Alexander found out that among Russian listed
firms, the relationship between profitability and ownership concentration follows U-
shaped pattern reaching minimum at about 57% concentration of the ownership, which
means that higher ownership concentration does not necessarily lead to higher firm
financial performance. This result in Russian firm was consistent with Tian and Estrin,
(2005) that the detrimental effect of state shareholding is not monotonic but initially
declines as the state retains some shares, up to a holding of between 30 percent and 40
percent, and increases thereafter.
The findings in other emerging countries are somewhat more controversial
than those findings in developed countries. In some countries, studies in some emerging
countries shows that ownership does not influence performance. For example, empirical
results from study in Arab countries implied that there is no significant relationship
between ownership concentration and firm performance among firms in Arab countries
(Bolbol, Fatheldin and Omran, 2008). Another set of empirical results in Jordan also
points out that ownership concentration whether it is managerial or non-managerial has
no significant effect on firm's performance when it is measured by accounting measures
((Warrad, L., Almahamid, S. M., Slihat, N., & Alnimer, M., 2013). To sum up, quite
different and sometimes contradictory results have been obtained through numerous
investigations in transition economies (Kuznetsov, Pavel and Muravyev, Alexander,
2000) with the acceptance trend toward the idea that the more concentration ownership
structure for these firms, the better it performance can be.
17
2.4. Dominant (Insider/Outsider) Ownership:
The terms “majority ownership of equity”, “State dominant ownership” or
“dominant ownership at 51%” seem to be too familiar in the ownership domain for
enterprises and investors. However, the nature of these terms is still at a prolonged
debate. Moreover, majority of shares outstanding or 51% of charter capital in an
enterprise that an institution or individual owns does not necessary grants it the absolute
control over all of the enterprises’ operating activities.
According to Dharwadkar et al.’s theoretical concepts on dominant owner
(whether insider or outsider), a shareholder must own a proportion of more than 50% of
total shares outstanding to be considered as dominant owner. This should not be
problematic for insider owners when majority of them are in form of the State, and the
State holds average of 57% shares in listed companies in Vietnam Stock market (Vu,
2012). However, the number of firms that has more than 50% of equity belong to a single
owner is really of limited number for other types of ownership, especially for outsider
owners in Vietnam. Should that percentage of more than 50% be the percentage
benchmark to classify dominant ownership structure, there would be less than 10
enterprises classified as DOO, which is too small for the study group. Moreover,
Decision No. 55/2009/QD-TTg of April 15, 2009, on holding rates of foreign investors
on the Vietnamese securities market states that the foreign investors (a ownership sub-
type of DOO) are not allowed to hold exceed 49% of total number of stocks of a public
joint-stock company. Hence, with 50% benchmark, no foreign owner (outsider owner)
could be considered dominant owner. Therefore, the definition and benchmark of
“dominant owner” must be modified to better suit the Vietnamese governance context.
According to Chapter I, Article 6, Clause 9 in the Law on Securities No.
70/2006/QH11 approved by the National Assembly of the Socialist Republic
of Vietnam in 2006, majority shareholders are those who directly or indirectly own at
least five percent voting share of a listed company. It is of similar classification in several
previous studies where large shareholders hold minimum percentage of 5% equity (Tosi
18
& Gomez-Mejia, 1994; Zajac and Westhphal, 1994). These majority shareholders or
large block-shareholders have the voting right toward several important decisions of the
company, but not the right to influence the settlement of those issues.
Shareholder veto right is another familiar terms which can be considered in
this case. The veto power of shareholders is not stated clearly Law of Enterprises in 2005.
However, we can capture it nature from some of the articles in the Law of Enterprise,
2005 itself. Article 104, clause 3 in the Law on Enterprises No. 60/2005/QH11 approved
by the National Assembly of the Socialist Republic of Vietnam on the 29th day of
November states that:
“3. A resolution of the General Meeting of Shareholders shall be passed in a
meeting when all the following conditions are satisfied:
(a) It is approved by a number of shareholders representing at least sixty five
(65) per cent of the total voting shares of all attending shareholders; the specific
percentage shall be stipulated in the charter of the company
(b) In respect of resolutions on classes of shares and total number of shares
of each class which may be offered; on amendments of and additions to the charter of the
company; on re-organization or dissolution of the company; in respect of investments or
sale of assets equal to or more than fifty(50) per cent of the total value of assets recorded
in the most recent financial statement of the company, unless otherwise provided by the
charter of the company, the approval by a number of shareholders representing at least
seventy five (75) per cent of the total voting shares of all attending shareholders shall be
required; the specific percentage shall be stipulated in the charter of the company”.
This articles can be expressed that most of the major decisions of the General
Meeting of Shareholders can be through if it is approved by the shareholders with the
proportion of at least 65% voting shares of all attending shareholders. Thus, shareholders
or group of shareholders that keep more than 35% charter capital would have the veto
power over all decisions in the General Shareholders Meeting, whether those decisions
are right or wrong (VAFI, 2006). This understanding makes the policy to maintain 51%
19
ownership of the State and the restriction of maximum 49% equity sell for foreign
investors seems unnecessary, even irrelevant.
The other findings in the neighbor country, China also suggest that the
average level of State ownership in China’s domestically listed firms is 34%, and China
is considered as a country with high concentration of State ownership. Moreover, with
that average of 34%, the Chinese government had had enough power to exert its
dominant owner characteristics (Jia, Sun and Tong, 2005). With a majority shareholder
defining at minimum 5% and the unrealistic 50 percent benchmark with too little number
of necessary firms can reach, a 35 percent threshold seems to be more practical.
Therefore, if we take the 35 percent, as the benchmark to the determination of dominant
or non-dominant, it would be more logical and more consistent with the Vietnamese
economic and political context.
2.5. Agency Theories Framework for Privatization in Emerging Economies
(Dharwadkar et al., 2000):
Figure 4: Agency Theory Framework for Privatization in Emerging Economies
Firm performance
*Financial
*Operational
Corporate structure
*Capital structure
*Organizational structure
Proposition 2a, 2c
Ownership structure
*Type:
Outsider vs. Insider
*Concentration:
Dominant vs. Distributed
Proposition 1a, 1b, 1cManagement
structure
*Top management compositions
*Top management contracts
Proposition 2b, 2d
20
(Source: Dharwadkar et al., 2000)
The above figure describe the Agency Theory Framework for Privatization in
Emerging Economies developed by Dharwadkar et al. (2000). While all three factors:
Corporate structure, Ownership structure and Management structure may in turn effect
the performance of the enterprises, this study strictly focus on the impact of Ownership
structure on firm performance, thus pay full attention to the two attributes of the
Ownership structure: type of owner and concentration of those owner(s). Below is
Dharwadkar’s propositions relating to the ownership structure of firm in emerging
economies:
Proposition 1a: In emerging economies, privatized firms with outsider
ownership structures will have better performance than privatized firms with insider
ownership structure.
Proposition 1b: In emerging economies, privatized firms with dominant
ownership structures will have better performance than privatized firms with distributed
ownership structure.
Proposition 1c: In emerging economies, privatized firms with dominant
foreign ownership will minimize both traditional and unique agency problems and will
have better performance than those privatized firms with dominant local individual or
local institutional ownership structures.
Let set aside proposition 1c, as we will only test the relationship between
dominant insider ownership structure and dominant insider ownership structure, not
among outsider or insiders owners. Therefore, this research focuses only on the first two
propositions of Dharwadkar et al. (2000) to initiate the idea that in emerging economies
(including Vietnam), dominant outsider ownership structure may be better for firm
performance in the context.
21
2.6. Hypothesis development:
Effective ownership structure is an important area for performance
enhancement to take place (Akimova and Schwodiauer 2004, Pham, 2009). In this study,
the Government representatives in the Vietnamese privatized firms are assumed not to
pay sufficient attention to the ownership structure and their possible effects on the firm
performance; hence, this could be the first issue to be checked and addressed in our
entirely weak corporate governance context. In Vietnam, there are still few articles and
studies regarding the suitable ownership structure for the Vietnamese firms in the
emerging context, and even minimum have been conducted relating to the suitability of
the dominant outsider/ dominant insider ownership structure and its benefits for
Vietnamese firms (the benefits that may even out-weight its side effects). Hence, this
study will examine the effects of dominant outsider ownership on firm performance
comparing to dominant outsider ownership structure.
Studies on the relationship between ownership structure and firm performance
have also recently carried out in China and some emerging markets (Akimova and
Schwodiauer, 2003; Chen, Y, M, 1998; Earle, 1998; Gedajlovic and Shapiro, 2002;
Kuznetsov and Muravyev, 2001; Le and Chizema, 2011; Pham, 2009; Xu and Wang,
1997; Phung & Hoang 2013). However, the relationship may even be different in
different countries (Konijn, Kräussl & Lucas 2011). This means that the relationship
between ownership structure and firm performance in emerging economy may not only
different with those in developed markets, but also among emerging economies
themselves. Hence, studying about the impact of dominant outsider ownership structure
and dominant insider ownership structure would provide more insights for the issue of
ownership structure in an emerging economy context. These reviews of previous studies
have inspired this research’s hypotheses:
22
Hypothesis 1: Dominant insider ownership (DIO) has a positive impact on
firm performance
Hypothesis 2: Dominant outsider ownership (DOO) has a positive impact on
firm performance
Hypothesis 3: DOO has a stronger impact on firm performance than DIO
23
Chapter 3
METHODOLOGY:
This part includes the set of methods, principles and models used in order to
test the hypotheses of the research.
3.1. Research design:
This research is an empirical study and approaches mainly in quantitative
method (qualitative method is also used to further explain the quantitative results). The
sample size is 145 companies collected randomly across industries, which is
representative enough to generalize the research results for the listed (equitized) firms in
the Vietnamese stock market. Moreover, the research is a cross-sectional study (from
2010 to 2012), which means that the differences between sections are more important
than between time dimension. The table below briefs the research design of this study:
Table 2:
Summary of Research Design
RESEARCH DESIGN
Degree of Question Crystallization • Formal Study,
• Deductive reasoning
Data Collection Method • Monitoring
The Time Dimension • Cross-sectional and Longitudinal
The Topical Scope • Statistical Study
Purpose of the study • Casual-predictive
Researcher Control of Variables • Ex post facto
24
3.2. Sampling method and Sample size:
According to Donald & Pamela (2006), sampling is selecting some of the
elements in a population, and then we may draw conclusions about the entire population.
In this research, the non-probability sampling method is applied.
The targets are firms from various industries that were privatized and are
being listed in either Ho Chi Minh Stock Exchange (HOSE) or Hanoi Stock Exchange
(HNX). Essentially, companies listed on HOSE are subject to higher standard of listing
requirement than those on HNX; however, HOSE and HNX are similar in nature. They
are both official stock exchange markets in Vietnam, which strictly follow the legal
framework Vietnam’s Securities Law. Hence, firms examined in this research are chosen
from HOSE and HNX because those are the ones that we could get the operation and
financial performance as well as information on the firms’ ownership structure with the
highest reliability level.
The research does not cover companies from financial sectors as those
companies have some distinctive characteristics that are different from the companies in
other industries, such as corporate structure, revenue models, etc. that may not be
considered as part of the population.
The sample in this research is about 145 firms and the time panel is 3 years,
which makes up for 435 observations for the tests. Secondary data on firm ownership
structure, size, financial performance, etc. of 145 firms throughout three years (2010-
2012) and nine industries (Industrials, Consumer Goods, Services, Health Care, Oils and
Gas, Energy, Materials, Technology and Telecommunication) have been extracted from
reliable sources.
Among the nine industries, Industrials and Consumer Goods are accounted for
the biggest proportion of total number of firms/ observations, about 44% and 28%
25
respectively. Meanwhile, there are only one firm in the Oils and Gas industry and three
firms in the Telecommunication industry, which makes up for less than 5% of total firms/
observations.
After examining the data collected, several observations appear to deviate
significantly away from the average sample’s observation. As a result, those observations
were eliminated to improve the coefficient of determination (R-squared). Thus, 19 cases
were considered outliers and were omitted from the panel of observations. That leaves us
with 144 firms and 416 observations available for testing.
Table 3:
Industry Description
No.
Industry
Description
Number
of firms
Number
of
Observa
tions
Percentage
of the
Industry
(%)
1 Industrials Construction and Materials,
Electronic and Electrical
Equipment, Industrial
Engineering, Industrial
Transportation and Support
Services, etc.
64 189 45.43%
2 Consumer
Goods
Beverages, Food Producers,
Household Goods, leisure
Goods, Personal Goods.
31 86 20.67%
3 Services General Industrials, Media,
Travel and Leisure.
15 44 10.58%
4 Health Care Pharmaceuticals and
Biotechnology
6 18 4.33%
5 Oils and Gas Oil, Equipment, Services
and Distribution.
1 1 0.24%
6 Energy Electricity, Gas, Water and
Multi-utilities.
7 24 5.77%
26
7 Materials Chemical, Industrial Metals
and Mining
11 29 6.97%
8 Technology Technology Hardware and
Equipment
6 18 4.33%
9 Telecommuni
cation
Fixed-line
Telecommunication
3 7 1.68%
TOTAL 144 416
3.3. Data collection procedure:
Firstly, the firms examined in the study are selected randomly from the whole
population of listed firms in both HOSE and HNX, and nearly 200 firms were selected
(excluding the financial firms). The secondary data on ownership structures and firm
performance of the firms were then retrieved from Annual Reports and Yearly Financial
Statement in 2010, 2011 and 2012. Secondly, after skimming through the Annual reports
and companies’ websites, about 40 firms of 200 firms was eliminated to only left remain
145 firms that were SOEs and then privatized. Thirdly, ownership structures type would
be extracted also from the annual reports of each company. If Foreigner, Local Institution
or Local Individual (Outsiders) owns the majority shares (more than 5%) of the total
equity, then that company has Dominant Outsider Ownership. If Managers, Employees or
the State (Insiders) owns the majority proportion of shares (more than 5%) of the total
equity, then that company has Dominant Insider Ownership. In addition, if there is no
entity possesses more than 5% of total firm equity, then that firm does not present a
dominant type of ownership. The next step is to extract the needed numbers from
financial statements and calculate the Total Asset (for Firm size), ROA, ROE (for Firm
performance) and D/E (for Firm Debt ratio). Finally, all data were to examine for the
outliers and exclude them from the observation panel. After that, those data and ratio
would (Lina, Soud, Nimer, & Munther, 2013) be used for statistical tests using regression
model.
27
3.4. Research model:
3.4.1. Regression model:
With the hypothesis abovementioned, we can draw our hypothesis model as
below:
𝐹𝑃 = 𝛽0 + 𝛽1 × 𝐷𝑂𝑂 + 𝛽2 × 𝐷𝐼𝑂 + 𝛽3 × 𝐷𝐸 + 𝛽4 × 𝐹𝑆 + ∫ 𝛽𝑖 × 𝐼𝑖
9
1
+ 𝜀
Where:
β0: the least squares estimate of the intercept
𝝴: a residual term
FP: the proxy(s) used to evaluate the firm performance (ROA, ROE, Tobin’s
Q, etc.), the dependent variables;
DOO: the Dominant Outsider Ownership, the independent variable;
DIO: the Dominant Insider Ownership, the independent variable;
DE: Debt/Equity, control variable;
FS: firm size, control variable;
Ii: the Industry such that i = [1, 9], where (1) Industrials, (2) Consumer Goods,
(3) Services, (4) Health Care, (5) Oil and Gas, (6) Energy, (7) Materials, (8) Technology,
(9) Telecommunication; control variables.
3.4.2. The variables:
3.4.2.1. Dependent variables:
The dependent variable in this research is firm performance, which means
firm profitability. Empirical researches have used either market-based or accounting-
based indicators to measure firm performance, depending on their purposes. Moreover,
many studies have indicated the highly effectiveness of accounting measures such as
Return on Assets (ROA) and Return on Equity (ROE) (Chaghadari, 2011; Chen and
Dodd, 2001). ROE focuses on return to the shareholders of the company. It is a quick
and easy to understand metric for shareholders. However, the company can somehow
28
distort and maintain a desirable ROE, thus hide the deteriorating operational profitability
of the company. The other mentioned measure, ROA, however may help avoid such
distortions originated from financial strategies to maintain ROE. ROA shows the amount
of earnings generated from capital assets invested, hence allow us to measure how well
corporate governance perform (in this case: ownership) as assets are utilized directly by
managers. The effectiveness of ROA measure for firm performance has been supported
by several researchers (John Hagel III, 2010, Hung, 2010). In this research, we try to
measure the performance of a firm by both ROA and ROE ratio to gain a more thorough
view on the firm performance.
3.4.2.2. Independent variables:
The two factors concerning this research are Dominant Outsiders and
Dominant Insiders, which is quoted as DOO and DIO in the regression model above.
These two would be coded using dummy variables. When majority shareholders are
outsider (DOO type of ownership), “1” would be coded for DOO and “0” for DIO. When
a majority shareholder is insider, “1” would be coded for DIO and “0” for DOO. Hence,
when a company has no dominant ownership (non-dominant type of ownership), “0”
would be coded for both DOO and DIO.
As mentioned, the level of “dominant” ownership will not be determined as
50%. Once 50% level of dominant is employed, there are less than 10 company could be
presented as dominant outsider (the dominant share of more than 50% equity rarely takes
place for outsiders owners in Vietnamese listed firms) and a massive number of firm
would be considered as dominant insiders owners. Hence, for the purpose of this study,
the “dominant” benchmark would be determined at the 35% level of equity.
When using the 35% benchmark for determine the dominant level, it appears
that several equity owners in a firm at once can satisfy the qualifications of dominant,
hence leads to multi- dominant owners. However, this study does not focus on whether a
company with more than one majority shareholders possessing any different
29
characteristics than that with only one dominant shareholder. However, the main concern
of this study is whether a firm with DIO and DOO presented has any value-added
contribution to the firm performance, comparing to the firm with no dominant owner, as
well as whether DOO or DIO would be more valuable to the firm performance.
3.4.2.3. Control variables:
Control variables are added into the regression equation to be accounted for
others effects on firm performance rather than of ownership structures, hence leaving the
results of the effects of main variables (DIO, DOO) become more accurate and objective.
The three control variables added are firm size, debt ratio and firm industry. Firstly, Firm
size is measured by logTA. Firm size may represent the potential economies of scale and
scope which may associate with firm performance (Gedajlovic and Shapiro, 2002; Ang,
Cole and Lin, 2000). Firms with different size (different amount of assets) would have
different opportunities toward obtaining debts, increase productivity or profitability and
determine company growth. The influence of firm size on performance would be
controlled by natural logarithm of total assets. We take natural logarithm of total asset for
the measurement of firm size to make the variables’ data distributed more normally
Secondly, company with different debt ratio also exposed to different level of financial
risks, hence in turn affect performance. Lu et al., (2005) also states that debt does have a
certain influence on firm performance. Finally, industries are considered different in
terms of both economic and political importance (Nee, Opper and Wong, 2007), thus,
they may experience different level of State attention and intervention. Company from
different industries also experience different environments and encounter different
competitors, hence has different standpoint on firm performance. The industry control
variables would be put into the equation in form of dummy variables. There are nine
industries, so there would be eight dummy variables presented in the regression model, of
which Industrials would be the base industry. Therefore, I1 is Consumer Goods, I2 is
Services, I3 is Health Care, I4 is Oils and Gas, I5 is Energy, I6 is Materials, I7 is
30
Technology and I8 is Telecommunication. For example, if the firm is in Consumer Goods
industry, I1 would be coded as “1”, and all other industry would be coded as “0”, vice
versa for all other industry accept the base industry. If a company is in Industrials, all of
the Ii would be coded as “0”. The table below summarizes the variables used in the
model:
Table 4:
Summary of three variable types
Type of Variable Variable Name Description Coding
DEPENDENT
VARIABLE
ROA Return on Asset = Income
after Interest and tax to Total
Asset
INDEPENDENT
VARIABLE
DIO Dominant Insider Ownership 2 Dummy variable
coding “1” or “0”
DOO Dominant Outsider Ownership
CONTROL
VARIABLE
D/E Leverage. Ratio of total equity
TA, logTA Total Assets. Natural
Logarithm of Total Assets.
I1 Consumer Goods Industry 8 Dummy
variable coding
“1” or “0”
Industrial is the
base industry
(default
industry)
Financial sector
is excluded.
I2 Services Industry
I3 Health Care Industry
I4 Oils and Gas Industry
I5 Energy Industry
I6 Materials Industry
I7 Technology Industry
I8 Telecommunication Industry
31
Chapter 4
DATA ANALYSIS AND RESULTS:
This chapter present the results of statistical tests conducted for the variables:
descriptive analysis, correlation analysis and linear regression with ROA and ROE as
dependent variable.
4.1. Descriptive analysis:
The descriptive analysis presents a general view on the relevant variables. The
number of observations after omitting the outliers is 416 for 144 firms across three years
2010, 2011 and 2012. The average return on asset (ROA) of panel data consists of 416
observations is 5.72% and it fluctuates at 6.95% standard deviation, which is relatively
large. The average return on equity (ROE) of 416 observations is 11.92% and it fluctuates
at 11.49% standard deviation, which is also high. ROA and ROE scatter around the mean
with high standard deviation because the sample consists of firms from different
industries and various sizes. For the debt ratio, these firms use on average more than
triple of their equity, fluctuate with a significant standard deviation.
Table 5:
Descriptive analysis for variables (not dummy)
ROA ROE TDTE LOGTA
Mean 6.70% 12.15% 0.716041 13.11071
Median 5.72% 11.92% 0.469747 13.04253
Maximum 31.87% 45.62% 3.59321 16.56167
32
Minimum -16.89% -45.55% 0 10.50287
Std. Dev. 6.95% 11.49% 74.51% 114.05%
Skewness 0.713613 -0.589425 1.314232 0.454106
Kurtosis 4.691946 5.945168 4.583035 3.287114
Observations 416 416 416 416
Across the panel sample, Dominant Insider Ownership (DIO) represents 38%
of total observations while Dominant Outsider Ownership (DOO) is accounted for only
7% of the total observations. That leaves the non-dominant ownership 55% of total
observation.
Figure 5: Ownership structure of all samples from 2010 to 2012.
4.2. Correlation analysis:
Correlation analysis measure whether or how strongly pairs of variables are
related.
38%
7%
55%
Ownership Structure (2010 - 2012)
DIO DOO NDO
33
Firstly, the correlation between DIO and DOO is r= -0.23, which means there
are minor downhill linear relationship between these two variables. However, the
relationship is rather weak and insignificant for in this case. Secondly, the correlation
between DIO and ROA is r=0.13 and DIO has a positive relationship with ROA at 99%
level of confidence (p-value < 0.01). In addition, DIO also presents an even more positive
relationship with ROE (r=0.229) also at a significant level (p-value< 0.01). Secondly, the
correlations between DOO and ROA, as well as DOO and ROE, both have a p-value >
0.1, which means that there is no relationship between DOO and ROA or ROE. These
findings are consistent with the hypothesis 2 that DIO has favorable impact on firm
performance. However, they do not support hypothesis 1 that the DOO has a positive
influence on firm performance, but rather indifferent towards firm performance. Finally,
the correlation between ROA and ROE are remarkably high with r=0.859 at significant
level (p-value< 0.01), which means that there is a strong uphill (positive) linear
relationship between these two variables. This implies that the outcome of the regression
tests on relationship between ROA and ROE with firm performance is expected to be
considerably consistent with each other.
34
Table 6:
Correlation analysis of regression variables
Probability DIO DOO LOGTA TDTE I1 I2 I3 I4 I5 I6 I7 I8 ROA ROE
DIO 1.000
-----
DOO -
0.232 1.000
0.000 -----
LOGTA -
0.026
-
0.028 1.000
0.600 0.572 -----
TDTE 0.071 0.056 0.427 1.000
0.148 0.258 0.000 -----
I1 -
0.091 0.081 0.031 0.079 1.000
0.063 0.098 0.532 0.110 -----
I2 -
0.122 0.051 -0.158
-
0.171
-
0.176 1.000
0.013 0.297 0.001 0.000 0.000 -----
I3 -
0.054
-
0.060 0.102
-
0.122
-
0.109
-
0.073 1.000
0.275 0.219 0.037 0.013 0.027 0.136 -----
I4
0.060
-
0.014 0.146 0.033
-
0.025
-
0.017
-
0.010 1.000
35
0.223 0.777 0.003 0.509 0.610 0.731 0.832 -----
I5
0.239
-
0.070 0.097 0.031
-
0.126
-
0.085
-
0.053
-
0.012 1.000
0.000 0.153 0.048 0.527 0.010 0.083 0.284 0.805 -----
I6
0.007
-
0.078 0.090 0.097
-
0.140
-
0.094
-
0.058
-
0.013
-
0.068 1.000
0.889 0.114 0.067 0.049 0.004 0.055 0.236 0.785 0.168 -----
I7 -
0.174 0.075 0.151 0.026
-
0.109
-
0.073
-
0.045
-
0.010
-
0.053
-
0.058 1.000
0.000 0.129 0.002 0.596 0.027 0.136 0.358 0.832 0.284 0.236 -----
I8
0.122
-
0.037 -0.090
-
0.084
-
0.067
-
0.045
-
0.028
-
0.006
-
0.032
-
0.036
-
0.028 1.000
0.013 0.450 0.068 0.087 0.174 0.360 0.572 0.896 0.510 0.466 0.572 -----
ROA
0.130
-
0.002 -0.075
-
0.416 0.085 0.097 0.211
-
0.006 0.000
-
0.046
-
0.090
-
0.153 1.000
0.008 0.973 0.125 0.000 0.082 0.049 0.000 0.906 0.996 0.352 0.067 0.002 -----
ROE
0.229
-
0.022 0.103
-
0.162 0.118
-
0.004 0.163 0.021
-
0.014
-
0.012
-
0.046
-
0.161 0.859 1.000
0.000 0.660 0.036 0.001 0.016 0.932 0.001 0.676 0.778 0.806 0.347 0.001 0.000 -----
36
4.3. Regression results:
4.3.1. Testing linear regression with ROA as dependent variables (Test 1):
Table 7:
Results of regression analysis for ROA during three years 2010 - 2012.
Variable Coefficient Std. Error t-Statistic Prob.
TDTE -0.04477 0.004437 -10.08932 0.0000
LOGTA 0.007268 0.002957 2.458085 0.0144
I1 0.02636 0.007689 3.428356 0.0007
I2 0.019833 0.010024 1.978526 0.0485
I3 0.059525 0.014871 4.002827 0.0001
I4 -0.02187 0.059606 -0.366912 0.7139
I5 -0.00591 0.013081 -0.452039 0.6515
I6 0.006407 0.01179 0.54345 0.5871
I7 -0.01132 0.014944 -0.757426 0.4492
I8 -0.1033 0.022788 -4.533207 0.0000
DIO 0.034183 0.00644 5.308014 0.0000
DOO 0.01945 0.011378 1.709323 0.0882
C -0.01937 0.03765 -0.514509 0.6072
R-squared 0.311547 Hannan-Quinn criter. -2.75824
Adjusted R-squared 0.291047 Durbin-Watson stat 1.113018
F-statistic 15.19751
Prob(F-statistic) 0.00000
The tests above examine the linear relationship between firm performance
measure, ROA with DIO and DOO, comparing to that of non-dominant ownership
(NDO) firms. Table displays a positive coefficient for the dominant insider ownership,
comparing to non-dominant ownership, and firm performance measure by ROA,
37
statistically significant at less than 0.01 (p-value <0.01) for the panel of three years 2010
– 2012. Thus, the firm performance (ROA) of enterprises with dominant insider
ownership is 4.48% higher than that of enterprises with non-dominant ownership with
99% confidence level. This outcome supports hypothesis 1, that DIO has favorable
impact on firm performance. The result might not be that much consistent for DOO.
There is also a positive coefficient for the dominant insider ownership, comparing to non-
dominant ownership, and firm performance measure by ROA. However, the confidence
level would be lower at 90% for this relationship to occur. Therefore, we may say that
firm performance of enterprises with DOO is better than performance of those with non-
dominant ownership 1.945%, but only with 90% confidence. Consequently, these results
appear to refute hypothesis 3, that DOO has impact that is more positive on firm
performance than DIO.
In addition, this model also reveals significant connection of control variable
(Leverage, Firm size and Industry) and dependent variable (firm performance, ROA).
Firstly, firm size (LogTA) has a positive relationship with firm performance (ROA),
specifically ROA increase 0.7% for one unit increase of logTA. Secondly, there are also
significant association of debt ratio and firm performance (ROA) at p-value< 0.01. The
results indicates that debt ratio of privatized firm negatively related to firm performance
at 99% level of confidence, specifically ROA would decrease 4.48% for 1% increase of
debt ratio. Lastly, some of the industries also show statistically significant relationship
with firm performance. The industry of I1, I2 and I3, which is Consumer Goods, Services
and Health Care respectively, have a positive relationship with ROA; while
Telecommunication (industry of I8) presents a negative relationship with ROA. These
relationship are all presented with high level of confidence (p-value (I1, I3, I8) < 0.01; p-
value (I2) <0.05).
Furthermore, the above table of model summary shows the value of R square
is 0.312 and adjusted R square is 0.291. The R square indicates how much of the variance
in the dependent variable (firm performance measured by ROA or ROE) is explained by
38
the model (which includes the independent variables of Dominant Insider Ownership,
Dominant Outsider Ownership and Non-dominant Ownership). In this study, our model
explains 29.1% of the variance in firm performance. Overall, our model has the
significance at 0.000 (which really means p<0.01); therefore, it can be stated that the
model of this study has reached statistical significance.
4.3.2. Testing linear regression with ROE as dependent variables (Test 2,
confirmation test):
Table 8:
Results of regression analysis for ROE during three years 2010 - 2012.
Variable Coefficient Std. Error t-Statistic Prob.
TDTE -0.043781 0.007822 -5.597532 0.0000
LOGTA 0.021429 0.005213 4.111031 0.0000
I1 0.046543 0.013555 3.433718 0.0007
I2 0.01693 0.017671 0.958082 0.3386
I3 0.079895 0.026215 3.0477 0.0025
I4 -0.037971 0.105078 -0.361357 0.718
I5 -0.037006 0.02306 -1.604788 0.1093
I6 0.009982 0.020784 0.480244 0.6313
I7 0.001674 0.026344 0.063562 0.9494
I8 -0.16876 0.040172 -4.20097 0.0000
DIO 0.079507 0.011353 7.003342 0.0000
DOO 0.026583 0.020059 1.325275 0.1858
C -0.172527 0.066372 -2.599396 0.0097
R-squared 0.217513 Hannan-Quinn criter. -2.75824
Adjusted R-squared 0.194213 Durbin-Watson stat 1.113018
F-statistic 9.335359
39
Prob(F-statistic) 0.0000
Similarly, the test 2 above examines the linear relationship between another
firm performance measure, ROE with DIO and DOO, comparing to that of non-dominant
ownership firms. The regression analysis for ROE shows a positive relationship of DIO
and ROE at significant level (p-value< 0.01). This result is also consistent with testing
results from test 1 and the hypothesis 1. It indicates that ROE of DIO would be 2.66%
higher than that of NDO. Moreover, the test results also show a positive relationship
between DOO and ROE, yet with that p-value> 0.1, this relationship is not noteworthy.
Thus, the test with ROE as measure of performance partially confirms the results from
the test with ROA.
Moreover, there are also significant association of debt ratio (TDTE) and firm
size (represent by logTA) with firm performance (measured by ROE), also at 99% level
of confidence.
Finally, the p-value of this regression model is also significant at 0.01 (p-
value< 0.01). In addition, the R-squared and Adjusted R-squared are high at 21.75% and
19.42% respectively. Thus, this model also reaches statistical significance.
40
Chapter 5
CONCLUSIONS AND RECOMMENDATIONS:
Firstly, this chapter discuss the outcome presented in the regression test for the
relationship between DIO, DOO and firm performance (ROA and ROE), as well as
further explain why or why not the results are consistent with the hypotheses. Secondly,
this section also points out several drawbacks of the study; hence, and promotes further
studies and delivers the author’s final remarks on the matter.
5.1. Results Discussions and Conclusions:
This study examines the impact of dominant outside ownership and dominant
inside ownership on firm performance. With the Vietnamese background provided, the
expected results in hypothesis 1 and 2 were that both dominant inside ownership and
dominant outside ownership structure would present a positive impact on firm
performance. It is also expected in hypothesis 3, Dharwadkar et al. (2000) that the
influence of the dominant outsider owners on firm performance would be more
prominent than that from dominant insider owners.
The results turn out match the expectation of hypothesis 1, DIO does have a
positive impact on firm performance (measured by both ROA and ROE). Why is that?
Since most of the dominant insider owners in Vietnam is the State or its legal persons
(Truong, Nguyen, and Nguyen, 2007), this result is also supportive to the findings from a
study on privatized firms in China, a country with similar political regime and economic
orientation with Vietnam, by Le and Chizema (2011). Le and Chizema (2011) state that
the higher level of State ownership concentration, the better the performance of the
enterprise.
41
Although many economists have stated that State shareholding is detrimental.
According to Boycko, Shleifer, and Vishny (1996), political intervention would probably
harm the firm profitability. For example, politicians may use their control to transfer
deliberately firms’ resources to their political supporters (Shleifer and Vishny, 1998).
Hence, firm performance would be negatively affected one way or another in the hands
of politicians. Empirical results from middle-income countries of Megginson and Netter
(2001) and emerging countries of Djankov and Murrell (2002) both support this point of
view.
However, findings from some resembling economies to Vietnam suggests
otherwise, thus support our outcome. We may find this outcome consistent with several
other cases of ownership after privatization in the world. For instance, Singapore
government still hold control over privatized SOEs (Government-linked corporation), but
these firms operate quite efficiently (Feng, Sun and Tong, 2004). In two well-known
studies on ownership structure and firm performance of Estrin and Rosevear (1999) in
Ukraine, the empirical results suggested that there was no positive impact of outsider
ownership (even foreign ownership) on firm performance. Nevertheless, there were
performance improvement relating to the insider ownership.
In China, legal person is a type of shareholder that economists argue that it is
similar to state ownership (Chen, 1998). The legal person is appeared to be an indirect
form of State ownership and it does have positive influence on firm performance. Xu and
Wang (1997) found out that legal-person ownership might enhance firm performance
because they monitor managers more actively as they benefit directly from performance.
They also suggest that legal persons in China context are similar to institutional investors
in market economies. May be that is partly how the dominant insider ownership in
Vietnam has positive impact on firm performance (ROA), compare to those with non-
dominant ownership. It is because a large number of dominant insider ownership firms
operate in a legal person ownership type (mostly those that has the dominant percentage
in between 35% and 50%).
42
In previous studies in Vietnam, Truong, Lanjouw and Lensink (2006) state in
their findings that the post-privatization performance improvement in Vietnam is quite
noticeable. The State (an insider owner) still maintain prominent portion of equity in
more than half of the privatized firms while the literature has so far revealed that the
performance improvement of privatized firm would often achieve by control of outsider
owners (Earle and Estrin, 1996).
The reason of this contradiction might be firms with State ownership
dominant (the most common type in insider owners), might enjoy some political support
that others could never experience. The empirical results of Tina and Estrin (2005) on the
effect of state ownership and firm performance is not monotonic, as in dominant insider
ownership would impact the privatized firms in the most positive way if the equity
portion the State holds is between 30 and 40 percent. The State has the power to implant
some certain favorable policies for the firms it owns such that it has enough authority and
incentives to do so. In other words, if the share of State in a privatized firm is to be
“profitable”, they should be in relatively large amount, hence dominant State ownership
at some appropriate level might somehow mitigate its negative “Governmental”
influences.
In our study, so far, the empirical findings in this study are consistent with the
literature above. The percentage of dominant of State ownership (major type in DIO) in
Vietnam is high leading to the better position to enjoy preferential policies (such as
subsidies, special treatment, and flexible policies, especially in important or strategic
industries) and out-weight the detrimental effects. In other words, a government-
dominated shareholding structure is more effective than a dispersed shareholding
structure under a weak legal enforcement. If there is to be government-based corporate
governance within a firm, the state’s shareholding stake must be sufficiently large; if its
voting rights are small, it is difficult for the government to control the managers (Tian
and Estrin, 2005). Corporate governance by the State shareholder may not be as strong as
that of other institutional shareholders but it exists according to Qian (2003). China has
43
come up with some serious policies to minimize the negative effects that state ownership
might impose on firm performance. For example, Chinese State Council has an explicit
policy guideline to remove managers from firms under government control if they have
been responsible for losses over three successive years (Tian and Estrin, 2005).
Vietnamese government might want take the above-mentioned measure as reference to
improve the corporate governance context in Vietnam to mitigate any state-managerial
problems and for better performance of privatized firms.
When comparing between state ownership (majority of our DIO samples) ,
one might suspect that concentrated (dominant) private shareholding provides superior
firm performance to concentrated state ownership, as state shareholding increases, the
balance of disadvantage from state ownership would begin to be offset by the impact of
the “helping hand” of the state and by concentrated state ownership. However, one would
also expect that performance to be at its minimum in mixed enterprises, where neither
private nor state owners have sufficient control rights to provide effective corporate
governance to the firm. In such enterprises neither state nor private owners is dominant
so managers may face conflicting objectives and demands and weaker corporate
governance, which will lead to inferior performance. These findings are consistent with
those in emerging countries like Jordan, China that the higher concentration of ownership
leads to better firm performance.
Another implication inferred from the test is that even with the shareholding
concentration of 35%, the DIO and DOO enterprises could actually enjoy greater
performance. Thus, these results have supported the findings of Tina and Estrin (2005) in
China and Truong, Lanjouw and Lensink (2006) in Vietnam, thus contradicting the
assertion of Dharwadkar that the ownership concentration can influence the operating
performance only with at least 50% equity. For example, in India, an emerging economy,
government privatized a small portion of equity in SOEs firms but they still improve
performance afterward (Gupta, 2005). This is due to well-established stock market
(developed long before the privatization process) (Jia, Sun and Tong, 2005; Gupta, 2005)
44
and clear framework to protect property rights (Boubakri et al., 2002). That would be
another story to be discussed. Moreover, in China, the average level of State ownership in
China’s domestically listed firms is 34% (Jia, Sun and Tong, 2004=5) and ownership
concentration level in China is perceived high. Hence, to consider ownership with more
than 35 percent of equity to be dominant would be rational.
The results also support hypothesis 2 with not as high level of confidence that
presented for hypothesis 1. Dominant outside ownership shows a positive relationship
with firm performance measured by ROA comparing to non-dominant ownership, but
with lower level of influence (90%), comparing to that of dominant insider ownership.
Moreover, when the firm performance measurement is ROE, DIO seems to impose no
impact on firm performance compare to NDO. These results are of little supportive to our
hypothesis 2 might due to some reasons relating to the Vietnamese context. For example,
the level of concentration for DOO is lower than that of DIO. With the expectation that
ownership concentration can improve firm performance, this low level of concentration
for DOO firms might somehow explain for the lack of impact on firm performance of this
type of ownership. Moreover, should the DOO presents a remarkably positive impact on
firm performance; it might better be in the hand of foreigners (Dharwadkar et al., 2000;
Jia, Sun and Tong, 2005). However, throughout the data collection procedure, we found
out that there are rarely any foreign investor that can be considered a dominant ownership
in a privatized firm in Vietnam to execute the controlling power. It is consistent with the
findings of Vu (2005) that the sales of SOEs to foreigners are very few because most
foreigner firms have little interest in obtaining such small proportion of shares in the
company when the maximum shareholding allowed were 30%. However, foreign
investors do have too much to offer. They do not only bring with them the capital but also
management, technology and access to foreign markets. For example, Hungary was
probably the most successful country with transition economies in Eastern Europe,
largely due to the strategy of government to actively encourage foreign firms to take over
domestic SOEs (Mihályi, 2000). Chinese government seeks foreign listings for medium
45
to large SOEs as a means to improve effectiveness and output of SOEs. This action
would help SOEs to learn new operating experiences from abroad, catch up with
international standards and compete in the world market (as world class enterprises)
(Zhou Daojong, May 26 and July 26, 1995, CSRC web news). In addition, an empirical
study by Jin, Qian, and Wilson H.S., (2005) for post-privatized firms in China shows that
partial privatization of Chinese SOEs via listed in Hong Kong Stock Exchange has
substantial average increase in real net profits. These findings support our view on
dominant foreign ownership (as outsider owners) above. Government in developing
countries as Vietnam may try to sell privatized firms abroad in seeking for external
financing as the domestic bank financing and debt markets are still limited (Bortolotti,
Fantini, and Scarpa, 2000). This might lead to supportive attitude towards market-
oriented policies, as Vietnam is trying to do. The recent Decision No. 55/2009/QD-TTg
of April 15, 2009 has increased the percentage shareholding of foreign investors in
domestic enterprises to no more than 49% of equity, which might stimulate the foreign
take-over in near future (Sjöholm, 2006).
5.2. Limitations, Recommendations and Conclusions:
5.2.1. Limitations:
Firstly, as much deliberate and thorough the research, it would still possess its
own drawbacks. The data collected from Vietnamese market are secondary data, which
may contain adjusted numbers or even worse, cooked numbers, no matter how reliable
the sources and how discreet the selection of the companies can be. Thus, the
development of Vietnamese legal framework and requirement for listed firms, as well as
improvement corporate governance in the future would change the quality of data and the
favorable condition of dominant ownership, thus deviate the results of similar
propositions.
The author conducted the research for the period of only three years with
incomplete provision of data; hence, the results are limited in the extent to which findings
46
can be applicable generally for all cases. Therefore, further researches with larger and
longer pool of data are recommended.
All of the shortcomings would in turn affect the study results one way or
another, hence leads to above suggestions to further researches in the future.
5.2.2. Conclusions:
Privatization is a process to which SOEs transform themselves into joint-stock
companies with expectation for better performance. The empirical research of Truong,
Lanjouw and Lensink (2006) is in the affirmative that equitization in Vietnam works in
the sense of improving firm performance in terms of most performance measures.
However, that performance enhancement gaining from privatization can only be
sustainable if a thorough restructuring, i.e. the entire corporate structure is placed into the
whole picture primarily. We can start with an establishment of a clear legal framework,
especially in area of ownership for newly privatized firms. Providing Vietnam ownership
context with high level of concentration, which cannot be altered in short time, such
performance improvement would be much dependent on how the dominant investors can
make the most of the situation to contribute to the management and operating process.
For those dominant insider owners, especially the State shareholder, they should exert
their existing advantage such as time of knowing the operation of the firms, being able to
offer favorable treatment for the firms, etc. to better the performance of the firm, not only
their personal or political interest. For those dominant outsider investors, it might be
worthy to put the fate of privatized firms in the hands of foreign investors, whose
expertise and experience with market economy far exceed those domestic investors, for a
change. Moreover, with their prudent mindset from a developed corporate governance
environment, expropriation of minor shareholders might not be as problematic as it is for
local investors. Overall, although equitization in Vietnam is partial, gradual, and
incomplete (Vu, 2005), it is still more efficient than 100% public ownership and this has
been true in Vietnam as elsewhere (Djankov and Murrell, 2002.). Thus, equitization is
47
inevitable. Henceforth, focusing on improving the advantages of dominant ownership
structure post-privatization, especially the dominant insider ownership, is necessary to
improve the firm performance to some extent.
48
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Russian enterprises. Academic of Management Executive, 12(2), 74-85.
Xu, X., & Wang, Y. (1997). Ownership structure Corporate Governance, and Firm’s
Performance: The Case of Chinese Stock Companies. Washington DC: Amherst
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54
APPENDICES:
Appendix A:
List of Company and its Ownership type by Industry.
No.
Stock
Code
Ownership
Type
Dominant
Ownership
Type
%Dominant
Industry
1 STP 0 NDO 0.00% Industrials
2 SIC 6 DIO 36.72% Industrials
3 MEC 6 DIO 51.00% Industrials
4 CTN 2 NDO 30.83% Industrials
5 PMS 6 DIO 46.00% Industrials
6 S55 0 NDO 0.00% Industrials
7 TXM 6 DIO 51.21% Industrials
8 BPC 6 DIO 55.50% Industrials
9 DNP 4 NDO 24.59% Industrials
10 ILC 6 NDO 24.98% Industrials
11 CMC 4 NDO 31.30% Industrials
12 PTS 6 DIO 50.00% Industrials
13 PPG 2 NDO 9.80% Industrials
14 MCO 3 NDO 14.86% Industrials
15 BBS 4 DIO 55.62% Industrials
16 SDC 6 DIO 51.00% Industrials
17 CJC 6 DIO 51.00% Industrials
18 NHC 6 NDO 30.00% Industrials
19 VTS 6 NDO 25.00% Industrials
20 SFN 6 DIO 40.00% Industrials
21 PJC 6 DIO 51.00% Industrials
22 DHA 6 NDO 24.86% Industrials
23 DCT 4 NDO 21.00% Industrials
24 NAV 3 NDO 9.12% Industrials
25 PTC 2 NDO 30.00% Industrials
26 LGC 2 DOO 79.98% Industrials
55
27 SFI 2 NDO 14.21% Industrials
28 MHC 3 NDO 14.41% Industrials
29 DIC 2 NDO 8.80% Industrials
30 HTV 6 DIO 50.08% Industrials
31 VPK 6 DIO 44.16% Industrials
32 MCP 6 DIO 39.89% Industrials
33 HAS 6 NDO 27.63% Industrials
34 PJT 6 DIO 51.21% Industrials
35 LBM 0 NDO 0.00% Industrials
36 CYC 2 DOO 78.00% Industrials
37 PLC 6 DIO 79.07% Industrials
38 SD9 6 DIO 58.38% Industrials
39 SDT 6 DIO 51.28% Industrials
40 SDA 6 DIO 51.00% Industrials
41 SD5 6 DIO 52.94% Industrials
42 VC2 6 DIO 51.23% Industrials
43 VFR 6 DIO 51.00% Industrials
44 TKU 1 DOO 90.00% Industrials
45 VMC 2 DOO 51.40% Industrials
46 DXP 6 DIO 51.00% Industrials
47 SD7 6 NDO 30.28% Industrials
48 SD6 6 DIO 36.90% Industrials
49 S99 2 NDO 25.55% Industrials
50 SJE 6 DIO 37.10% Industrials
51 VNC 6 NDO 30.00% Industrials
52 VGP 6 DIO 38.43% Industrials
53 VTV 6 DIO 55.37% Industrials
54 SNG 2 DOO 50.19% Industrials
55 REE 2 NDO 19.09% Industrials
56 GMD 2 NDO 7.31% Industrials
57 BMP 6 NDO 29.60% Industrials
58 PAC 6 DIO 51.30% Industrials
59 TTP 2 NDO 16.00% Industrials
60 BT6 2 NDO 20.19% Industrials
61 RAL 6 DIO 39.38% Industrials
56
62 TCR 1 NDO 19.20% Industrials
63 TMS 2 NDO 19.98% Industrials
64 ACC 6 DIO 73.37% Industrials
65 HNM 2 NDO 10.00% Consumer Goods
66 CAN 6 NDO 27.75% Consumer Goods
67 SAF 6 DIO 51.29% Consumer Goods
68 SJ1 2 NDO 22.60% Consumer Goods
69 NST 6 DIO 52.93% Consumer Goods
70 VTL 6 DIO 40.00% Consumer Goods
71 VBH 6 DIO 51.00% Consumer Goods
72 CLC 6 DIO 51.00% Consumer Goods
73 SAV 1 NDO 23.32% Consumer Goods
74 NSC 0 NDO 0.00% Consumer Goods
75 SCD 2 DOO 51.00% Consumer Goods
76 VTB 2 DOO 55.54% Consumer Goods
77 ICF 4 NDO 18.34% Consumer Goods
78 FMC 6 NDO 17.25% Consumer Goods
79 GMC 3 NDO 12.94% Consumer Goods
80 TS4 2 NDO 9.00% Consumer Goods
81 LAF 2 NDO 23.03% Consumer Goods
82 SGC 6 DIO 49.88% Consumer Goods
83 VNM 6 DIO 45.05% Consumer Goods
84 KDC 2 NDO 10.48% Consumer Goods
85 MPC 4 NDO 24.96% Consumer Goods
86 DRC 6 DIO 50.51% Consumer Goods
87 TAC 6 DIO 51.24% Consumer Goods
88 SVC 6 DIO 40.78% Consumer Goods
89 BHS 2 NDO 21.64% Consumer Goods
90 AGF 2 DOO 51.08% Consumer Goods
91 IFS 1 DOO 57.25% Consumer Goods
92 ABT 2 NDO 19.98% Consumer Goods
93 SSC 6 NDO 18.59% Consumer Goods
94 GIL 2 NDO 14.00% Consumer Goods
95 AVF 4 NDO 10.73% Consumer Goods
96 EBS 6 NDO 6.17% Services
57
97 STC 6 DIO 52.54% Services
98 SGD 6 NDO 18.80% Services
99 PAN 3 NDO 21.00% Services
100 SFC 2 DOO 49.99% Services
101 TNA 6 NDO 20.68% Services
102 HAX 6 NDO 32.63% Services
103 PNC 6 NDO 15.10% Services
104 TCT 2 DOO 51.00% Services
105 TMC 6 NDO 33.97% Services
106 SGH 6 DIO 38.86% Services
107 ALT 2 NDO 16.83% Services
108 VSH 6 NDO 30.55% Services
109 COM 6 DIO 35.00% Services
110 SJD 6 DIO 51.00% Services
111 DHG 6 DIO 43.15% Health Care
112 DMC 6 NDO 34.71% Health Care
113 IMP 6 NDO 27.43% Health Care
114 OPC 2 NDO 10.16% Health Care
115 JVC 2 NDO 31.06% Health Care
116 IMP 6 NDO 27.94% Health Care
117 PVD 6 DIO 50.38% Oils and Gas
118 NLC 6 DIO 51.00% Energy
119 HJS 6 DIO 51.00% Energy
120 RHC 6 DIO 50.62% Energy
121 PPC 6 DIO 51.00% Energy
122 TBC 6 NDO 24.00% Energy
123 SJD 6 DIO 51.00% Energy
124 PGC 6 DIO 40.29% Energy
125 KHP 6 DIO 51.53% Energy
126 VID 4 NDO 14.71% Materials
127 DTT 6 NDO 18.96% Materials
128 NBC 6 DIO 51.00% Materials
129 HRC 6 DIO 55.00% Materials
130 VIS 6 DIO 53.04% Materials
131 BMC 6 NDO 25.00% Materials
58
132 SMC 4 NDO 17.00% Materials
133 HMC 6 DIO 56.00% Materials
134 HAP 4 NDO 6.74% Materials
135 DHC 6 NDO 9.62% Materials
136 HLA 2 NDO 14.20% Materials
137 UNI 0 NDO 0.00% Technology
138 LTC 6 NDO 24.40% Technology
139 FPT 2 NDO 10.65% Technology
140 SAM 6 NDO 31.02% Technology
141 TYA 1 DOO 60.00% Technology
142 CMG 2 NDO 21.18% Technology
143 TLC 2 NDO 12.83% Telecommunication
144 VTC 6 DIO 45.00% Telecommunication
145 POT 6 DIO 50.00% Telecommunication
Appendix B:
List of Financial Indicators of each company in 3 years (2010 - 2012).
No.
Stock
Code
Year
ROA
ROE
Total Asset
(TA)
(Million VND)
logTA TDTE
1 HNM 2010 -0.0997 -0.1655 218711 12.2955 0.3291
2 HNM 2011 0.0074 0.0119 213998 12.2737 0.3553
3 HNM 2012 0.0057 0.0092 213884 12.2732 0.3933
4 TLC 2010 -0.0731 -0.0854 192091 12.1657 0.0000
5 TLC 2011 -0.2516 -0.3490 142717 11.8686 0.0442
6 TLC 2012 -0.3558 -0.3910 99396 11.5069 0.0000
7 STP 2010 0.1454 0.1644 177202 12.0850 0.0000
8 STP 2011 0.0796 0.0923 182117 12.1124 0.0000
9 STP 2012 0.0528 0.0622 183530 12.1201 0.0293
10 SIC 2010 0.0280 0.1123 610461 13.3220 2.1504
11 SIC 2011 0.0112 0.0515 674500 13.4217 2.0839
12 SIC 2012 0.0173 0.0781 698306 13.4564 1.9582
13 CAN 2010 0.0772 0.1617 196890 12.1904 0.5954
14 CAN 2011 0.1263 0.2798 255207 12.4498 0.7369
59
15 CAN 2012 0.0471 0.1053 228394 12.3388 0.6501
16 EBS 2010 0.0585 0.0930 180728 12.1047 0.2638
17 EBS 2011 0.0684 0.1092 174326 12.0687 0.0000
18 EBS 2012 0.1431 0.1904 166229 12.0211 0.0055
19 MEC 2010 0.0259 0.1641 764595 13.5471 3.5932
20 MEC 2011 0.0175 0.1306 866315 13.6720 3.7606
21 MEC 2012 0.0165 0.1157 898686 13.7087 3.1824
22 SAF 2010 0.1453 0.2551 105959 11.5708 0.0000
23 SAF 2011 0.1513 0.2497 127976 11.7596 0.0000
24 SAF 2012 0.1578 0.2413 126483 11.7479 0.0000
25 NLC 2010 0.1008 0.1107 113789 11.6421 0.0393
26 NLC 2011 0.1101 0.1164 111550 11.6222 0.0326
27 NLC 2012 0.0883 0.0947 113585 11.6403 0.0128
28 CTN 2010 0.0213 0.1151 596502 13.2988 1.2798
29 CTN 2011 0.0029 0.0177 621018 13.3391 1.3660
30 CTN 2012 0.0014 0.0078 595740 13.2976 1.3541
31 HJS 2010 0.0088 0.0294 544344 13.2073 1.8516
32 HJS 2011 0.0250 0.0935 623285 13.3428 2.0496
33 HJS 2012 0.0429 0.1594 664467 13.4067 2.0784
34 UNI 2010 0.0714 0.1098 173634 12.0647 0.4428
35 UNI 2011 -0.0455 -0.0779 170325 12.0455 0.5795
36 UNI 2012 0.0867 0.1571 184275 12.1242 0.6764
37 PMS 2010 0.0558 0.1040 165597 12.0173 0.3704
38 PMS 2011 0.0631 0.1262 226301 12.3296 0.2437
39 PMS 2012 0.0326 0.0511 183482 12.1199 0.0760
40 SJ1 2010 0.0944 0.1324 111291 11.6199 0.0356
41 SJ1 2011 0.0743 0.1258 154830 11.9501 0.3665
42 SJ1 2012 0.0618 0.1200 190213 12.1559 0.6737
43 STC 2010 0.0856 0.1270 118036 11.6787 0.0525
44 STC 2011 0.0957 0.1262 117708 11.6760 0.0439
45 STC 2012 0.1028 0.1627 140126 11.8503 0.1816
46 RHC 2010 0.0336 0.0719 112109 11.6272 0.8804
47 RHC 2011 0.0857 0.1561 146867 11.8973 0.5515
48 RHC 2012 0.0964 0.1660 139104 11.8430 0.4309
49 NST 2010 0.0343 0.1257 451680 13.0207 1.7336
60
50 NST 2011 0.0474 0.1449 392119 12.8793 1.1213
51 NST 2012 0.0228 0.0841 494686 13.1117 2.1011
52 S55 2010 0.0674 0.1659 257038 12.4570 0.4763
53 S55 2011 0.0731 0.2025 335338 12.7229 0.4059
54 S55 2012 0.0491 0.1355 364210 12.8055 0.2791
55 TXM 2010 0.0111 0.0279 252304 12.4384 1.0334
56 TXM 2011 0.0261 0.0743 302782 12.6208 0.0000
57 TXM 2012 0.0244 0.0445 195369 12.1826 0.0834
58 BPC 2010 0.0735 0.1155 124636 11.7332 0.2268
59 BPC 2011 0.0584 0.1062 146700 11.8961 0.2285
60 BPC 2012 0.0520 0.1090 174184 12.0679 0.4810
61 DNP 2010 0.0399 0.1148 220709 12.3046 1.4441
62 DNP 2011 0.0519 0.1497 241082 12.3929 1.4420
63 DNP 2012 0.0340 0.0980 242199 12.3975 1.4503
64 ILC 2010 0.0120 0.0440 425553 12.9611 2.4011
65 ILC 2011 -0.0891 -0.3963 357195 12.7860 3.0960
66 ILC 2012 -0.0300 -0.1454 325636 12.6935 3.3737
67 CMC 2010 0.1108 0.1644 81020 11.3025 0.1448
68 CMC 2011 0.0088 0.0103 64428 11.0733 0.0283
69 CMC 2012 0.0102 0.0130 70729 11.1666 0.0042
70 VTL 2010 0.0302 0.0944 105409 11.5656 1.4966
71 VTL 2011 0.0235 0.0648 92297 11.4328 1.2751
72 VTL 2012 -0.0197 -0.0830 121887 11.7108 2.0119
73 PTS 2010 0.0704 0.1587 155062 11.9516 0.1040
74 PTS 2011 0.0558 0.0869 142719 11.8686 0.0413
75 PTS 2012 -0.0175 -0.0285 128162 11.7611 0.0825
76 PPG 2010 0.0503 0.0948 187291 12.1404 0.3954
77 PPG 2011 0.0014 0.0032 230718 12.3490 0.5195
78 PPG 2012 -0.0663 -0.1724 210657 12.2580 1.0439
79 MCO 2010 0.0503 0.0948 289116 12.5746 0.3954
80 MCO 2011 0.0014 0.0032 309401 12.6424 0.5195
81 MCO 2012 -0.0663 -0.1724 279824 12.5419 1.0439
82 BBS 2010 0.0609 0.1073 122985 11.7198 0.4883
83 BBS 2011 0.0512 0.1065 149449 11.9147 0.5162
84 BBS 2012 0.0481 0.1149 178442 12.0920 0.7904
61
85 VBH 2010 0.0866 0.1097 43548 10.6816 0.0000
86 VBH 2011 0.1010 0.1069 36559 10.5067 0.0000
87 VBH 2012 0.0642 0.0696 36420 10.5029 0.0000
88 SDC 2010 0.0499 0.1788 178396 12.0918 0.0465
89 SDC 2011 0.0285 0.1138 197870 12.1954 0.0879
90 SDC 2012 0.0194 0.0788 202122 12.2166 0.1299
91 CJC 2010 0.0343 0.2903 384665 12.8601 1.5406
92 CJC 2011 0.0542 0.2471 226269 12.3295 1.1570
93 CJC 2012 0.0581 0.2334 218198 12.2932 1.0637
94 NHC 2010 0.3791 0.4668 48380 10.7868 0.0000
95 NHC 2011 0.1518 0.2098 52058 10.8601 0.0000
96 NHC 2012 0.0601 0.0725 43699 10.6851 0.0000
97 VTS 2010 0.2098 0.3666 76275 11.2421 0.2140
98 VTS 2011 0.1402 0.2247 87176 11.3757 0.1398
99 VTS 2012 0.0054 0.0095 88773 11.3938 0.3568
100 SGD 2010 0.0362 0.0749 95233 11.4641 0.1095
101 SGD 2011 0.0572 0.0964 81897 11.3132 0.0419
102 SGD 2012 0.1257 0.1732 70004 11.1563 0.0000
103 SFN 2010 0.0860 0.1179 61525 11.0272 0.2320
104 SFN 2011 0.0882 0.1399 71076 11.1715 0.5299
105 SFN 2012 0.1086 0.1584 66057 11.0983 0.3977
106 VTC 2010 0.0139 0.0228 95186 11.4636 0.1323
107 VTC 2011 -0.0784 -0.1461 93778 11.4487 0.1628
108 VTC 2012 -0.0269 -0.0478 84853 11.3487 0.0536
109 LTC 2010 0.0187 0.0712 244386 12.4065 0.9304
110 LTC 2011 0.0065 0.0224 245979 12.4130 0.6982
111 LTC 2012 0.0149 0.0563 307718 12.6369 0.4782
112 PJC 2010 0.0989 0.2234 107652 11.5867 0.1222
113 PJC 2011 0.0820 0.1609 134232 11.8073 0.1110
114 PJC 2012 0.0749 0.1470 145418 11.8874 0.1261
115 PAN 2010 0.0676 0.0774 297076 12.6017 0.0018
116 PAN 2011 0.0466 0.0538 193246 12.1717 0.0000
117 PAN 2012 0.2204 0.2494 369299 12.8194 0.0000
118 VID 2010 0.0187 0.0505 783885 13.5720 1.5203
119 VID 2011 -0.0095 -0.0276 810367 13.6052 1.6688
62
120 VID 2012 -0.0332 -0.0954 731029 13.5022 1.5145
121 DHA 2010 0.1362 0.1599 377072 12.8402 0.0899
122 DHA 2011 0.1010 0.1215 381644 12.8522 0.1079
123 DHA 2012 0.0429 0.0503 366192 12.8109 0.0991
124 CLC 2010 0.0711 0.2127 602846 13.3094 1.5682
125 CLC 2011 0.0960 0.2652 626168 13.3474 1.2214
126 CLC 2012 0.0840 0.2045 580066 13.2709 1.1831
127 SAV 2010 0.0177 0.0326 536541 13.1929 0.4734
128 SAV 2011 0.0119 0.0263 631632 13.3561 0.5396
129 SAV 2012 0.0106 0.0252 682250 13.4332 0.4006
130 NSC 2010 0.1426 0.2103 302986 12.6214 0.0027
131 NSC 2011 0.1717 0.2904 362548 12.8009 0.0017
132 NSC 2012 0.1990 0.2922 393154 12.8820 0.0007
133 DCT 2010 0.0295 0.0710 944010 13.7579 1.1839
134 DCT 2011 0.0266 0.0826 1205512 14.0024 1.6383
135 DCT 2012 -0.0485 -0.1599 1138848 13.9455 1.9420
136 SFC 2010 0.2383 0.3365 230147 12.3465 0.0863
137 SFC 2011 0.1389 0.1696 212397 12.2662 0.0000
138 SFC 2012 0.0585 0.1138 330501 12.7084 0.4594
139 SCD 2010 0.1284 0.1709 203383 12.2228 0.0000
140 SCD 2011 0.0982 0.1347 231843 12.3538 0.0000
141 SCD 2012 0.1078 0.1418 232646 12.3573 0.0000
142 VTB 2010 0.0825 0.1100 293614 12.5900 0.1301
143 VTB 2011 0.0562 0.0731 278599 12.5375 0.1115
144 VTB 2012 0.0444 0.0589 265584 12.4897 0.0731
145 NAV 2010 0.0772 0.1213 150978 11.9249 0.1811
146 NAV 2011 0.0706 0.1233 169552 12.0409 0.2752
147 NAV 2012 0.0244 0.0479 183119 12.1179 0.6010
148 ICF 2010 0.0536 0.1128 401708 12.9035 0.8926
149 ICF 2011 0.0276 0.0643 397353 12.8926 1.1255
150 ICF 2012 0.0011 0.0026 399110 12.8970 0.9627
151 FMC 2010 0.0403 0.1217 501973 13.1263 1.8404
152 FMC 2011 0.0141 0.0640 778049 13.5645 3.3242
153 FMC 2012 0.0010 0.0029 458960 13.0367 1.6113
154 PTC 2010 0.0010 0.0018 438620 12.9914 0.2017
63
155 PTC 2011 0.0042 0.0075 433678 12.9801 0.1769
156 PTC 2012 -0.1625 -0.3133 360175 12.7943 0.1965
157 LGC 2010 0.0975 0.2417 384766 12.8604 0.8271
158 LGC 2011 0.0136 0.0333 391691 12.8782 0.9715
159 LGC 2012 0.0022 0.0052 390185 12.8744 1.0500
160 GMC 2010 0.1127 0.2602 310101 12.6447 0.6890
161 GMC 2011 0.1085 0.2650 396435 12.8903 0.5652
162 GMC 2012 0.1111 0.2924 465842 13.0516 0.7801
163 TS4 2010 0.0485 0.1100 549277 13.2164 0.9872
164 TS4 2011 0.0357 0.1040 707228 13.4691 1.4538
165 TS4 2012 0.0163 0.0604 915690 13.7274 2.1277
166 SFI 2010 0.0833 0.1734 397670 12.8934 0.0000
167 SFI 2011 0.0701 0.1495 444383 13.0044 0.0000
168 SFI 2012 0.0903 0.1932 491417 13.1050 0.0089
169 LAF 2010 0.2368 0.3358 354368 12.7781 0.0269
170 LAF 2011 0.0143 0.0445 723638 13.4920 1.9473
171 LAF 2012 -0.6455 -1.8670 235746 12.3705 1.6735
172 MHC 2010 -0.1689 -0.4555 258597 12.4630 0.7083
173 MHC 2011 0.0044 0.0114 248991 12.4252 0.5216
174 MHC 2012 0.0242 0.0586 234829 12.3666 0.3896
175 DIC 2010 0.0500 0.1463 621193 13.3394 1.0977
176 DIC 2011 0.0256 0.0752 809390 13.6040 1.5234
177 DIC 2012 0.0100 0.0321 865353 13.6709 1.6335
178 HTV 2010 0.0677 0.0755 247345 12.4185 0.0000
179 HTV 2011 0.0903 0.1004 256019 12.4530 0.0000
180 HTV 2012 0.1339 0.1551 296723 12.6006 0.0000
181 TNA 2010 0.1173 0.3181 593764 13.2942 1.0846
182 TNA 2011 0.0597 0.1744 679898 13.4297 1.2012
183 TNA 2012 0.0589 0.1566 658288 13.3974 0.8475
184 VPK 2010 0.0714 0.1478 155464 11.9542 0.5746
185 VPK 2011 0.1662 0.2563 155768 11.9561 0.3120
186 VPK 2012 0.2606 0.3556 186976 12.1387 0.1446
187 MCP 2010 0.0810 0.1417 228091 12.3375 0.4458
188 MCP 2011 0.1131 0.2029 305053 12.6282 0.4902
189 MCP 2012 0.0751 0.1304 275906 12.5278 0.4159
64
190 HAS 2010 0.0228 0.0358 236821 12.3751 0.0012
191 HAS 2011 0.0024 0.0035 214782 12.2774 0.0012
192 HAS 2012 0.0240 0.0327 206083 12.2360 0.0012
193 PJT 2010 0.0750 0.1105 149330 11.9139 0.1392
194 PJT 2011 0.0925 0.1263 135699 11.8182 0.0000
195 PJT 2012 0.1094 0.1413 140639 11.8540 0.0000
196 HAX 2010 0.0302 0.0803 310014 12.6444 0.5250
197 HAX 2011 -0.0416 -0.1192 301156 12.6154 0.6389
198 HAX 2012 -0.1026 -0.2886 232192 12.3553 0.9902
199 PNC 2010 0.0152 0.0389 356431 12.7839 0.6697
200 PNC 2011 0.0000 0.0001 396839 12.8913 0.7602
201 PNC 2012 -0.0435 -0.1445 388154 12.8692 0.9038
202 LBM 2010 0.0607 0.0969 199604 12.2041 0.3171
203 LBM 2011 0.0768 0.1203 196849 12.1902 0.2713
204 LBM 2012 0.0917 0.1186 157013 11.9641 0.0000
205 DTT 2010 0.0059 0.0071 140380 11.8521 0.1311
206 DTT 2011 -0.0051 -0.0057 127912 11.7591 0.0894
207 DTT 2012 -0.0213 -0.0251 130541 11.7794 0.1442
208 CYC 2010 -0.0018 -0.0054 324498 12.6900 1.2045
209 CYC 2011 0.0017 0.0061 376019 12.8374 1.5363
210 CYC 2012 0.0000 0.0000 337463 12.7292 1.1916
211 PLC 2010 0.1186 0.3646 2270687 14.6356 1.4488
212 PLC 2011 0.0802 0.2394 2857748 14.8655 1.4122
213 PLC 2012 0.0677 0.1708 2492740 14.7289 1.0897
214 SD9 2010 0.0555 0.1950 1737669 14.3681 1.6330
215 SD9 2011 0.0336 0.1389 2153336 14.5825 2.0111
216 SD9 2012 0.0415 0.1754 2259489 14.6306 1.9592
217 SDT 2010 0.0667 0.2197 1532959 14.2427 1.0489
218 SDT 2011 0.0614 0.2098 1818852 14.4137 0.9729
219 SDT 2012 0.0572 0.1836 1857611 14.4348 0.9850
220 SDA 2010 0.0969 0.1431 275789 12.5274 0.0000
221 SDA 2011 0.0321 0.0532 317600 12.6685 0.2001
222 SDA 2012 -0.0014 -0.0029 392289 12.8798 0.1401
223 SD5 2010 0.0884 0.1858 716524 13.4822 0.6777
224 SD5 2011 0.0253 0.0819 1219502 14.0140 1.3097
65
225 SD5 2012 0.0205 0.0821 1544652 14.2503 1.8523
226 POT 2010 0.0373 0.0639 511894 13.1459 0.4603
227 POT 2011 0.0137 0.0301 644605 13.3764 0.5690
228 POT 2012 0.0124 0.0268 631871 13.3564 0.2933
229 VC2 2010 0.0346 0.1816 1187502 13.9874 1.6198
230 VC2 2011 0.0186 0.1135 1349432 14.1152 1.9393
231 VC2 2012 0.0149 0.0747 1386062 14.1420 1.3994
232 NBC 2010 0.0771 0.3414 996890 13.8124 1.2032
233 NBC 2011 0.0766 0.3006 980722 13.7960 1.3972
234 NBC 2012 0.0478 0.1958 1080192 13.8926 1.5808
235 TCT 2010 0.2787 0.3100 109795 11.6064 0.0000
236 TCT 2011 0.3278 0.3650 145681 11.8892 0.0000
237 TCT 2012 0.3013 0.3175 177414 12.0862 0.0000
238 VFR 2010 0.0380 0.1076 606768 13.3159 1.2424
239 VFR 2011 0.1000 0.2822 769940 13.5541 1.4183
240 VFR 2012 0.0145 0.0359 703192 13.4634 1.1308
241 TKU 2010 0.0192 0.0442 660050 13.4001 0.9561
242 TKU 2011 -0.0434 -0.1082 645247 13.3774 1.1564
243 TKU 2012 0.0022 0.0054 643321 13.3744 1.0872
244 VMC 2010 0.0343 0.1791 1082597 13.8949 1.9766
245 VMC 2011 0.0211 0.1081 1086322 13.8983 1.7431
246 VMC 2012 0.0123 0.0581 952395 13.7667 1.5723
247 DXP 2010 0.3886 0.4702 189403 12.1516 0.0000
248 DXP 2011 0.2235 0.2586 219416 12.2987 0.0000
249 DXP 2012 0.2986 0.3514 262602 12.4784 0.0000
250 SD7 2010 0.0258 0.1711 2527346 14.7427 3.1750
251 SD7 2011 0.0123 0.0756 2227281 14.6163 2.5820
252 SD7 2012 -0.0134 -0.0861 2169851 14.5902 3.1311
253 SD6 2010 0.0458 0.1473 821937 13.6194 0.9036
254 SD6 2011 0.0350 0.1419 1119587 13.9285 1.2194
255 SD6 2012 0.0358 0.1319 1155249 13.9598 1.5036
256 S99 2010 0.0947 0.1476 212292 12.2657 0.2549
257 S99 2011 0.0014 0.0024 224010 12.3194 0.3101
258 S99 2012 0.0101 0.0156 212556 12.2670 0.2630
259 SJE 2010 0.0367 0.1680 773936 13.5592 0.9265
66
260 SJE 2011 0.0305 0.1423 823097 13.6208 0.9944
261 SJE 2012 0.0375 0.1676 858381 13.6628 0.9249
262 VNC 2010 0.1813 0.2102 187037 12.1391 0.0000
263 VNC 2011 0.1099 0.1458 205305 12.2323 0.0000
264 VNC 2012 0.1107 0.1488 216959 12.2875 0.0001
265 VGP 2010 0.1284 0.1643 207598 12.2434 0.1541
266 VGP 2011 0.0939 0.1458 242432 12.3985 0.3663
267 VGP 2012 0.0934 0.1252 208590 12.2481 0.2453
268 TMC 2010 0.0582 0.1648 375307 12.8355 0.9505
269 TMC 2011 0.0598 0.1447 339556 12.7354 0.5536
270 TMC 2012 0.0504 0.1072 394018 12.8842 0.4820
271 SGH 2010 0.2127 0.2281 39112 10.5742 0.0000
272 SGH 2011 0.2301 0.2523 45645 10.7286 0.0000
273 SGH 2012 0.2024 0.2141 48495 10.7892 0.0000
274 SGC 2010 0.1323 0.1976 130184 11.7767 0.2392
275 SGC 2011 0.3301 0.3988 125540 11.7404 0.0848
276 SGC 2012 0.1329 0.1561 123710 11.7257 0.0000
277 VTV 2010 0.0494 0.0910 623452 13.3430 0.5482
278 VTV 2011 0.0419 0.0957 808595 13.6031 0.7815
279 VTV 2012 0.0301 0.0800 1020050 13.8354 0.8208
280 ALT 2010 0.0237 0.0317 269115 12.5029 0.1312
281 ALT 2011 0.0230 0.0276 246465 12.4150 0.1209
282 ALT 2012 -0.0428 -0.0754 230589 12.3484 0.2929
283 SNG 2010 0.0850 0.2288 296134 12.5986 1.0138
284 SNG 2011 0.0978 0.2488 350936 12.7684 0.7050
285 SNG 2012 0.0711 0.1615 336455 12.7262 0.7776
286 VNM 2010 0.3356 0.4540 10773033 16.1926 0.0713
287 VNM 2011 0.2707 0.3381 15582672 16.5617 0.0000
288 VNM 2012 0.2954 0.3756 19697868 16.7960 0.0000
289 FPT 2010 0.1375 0.4247 12304544 16.3255 1.1237
290 FPT 2011 0.1391 0.3766 14943086 16.5198 0.8467
291 FPT 2012 0.1397 0.3212 14209182 16.4694 0.4661
292 PVD 2010 0.0588 0.1696 14639766 16.4993 1.2088
293 PVD 2011 0.0579 0.1729 18535418 16.7352 1.2739
294 PVD 2012 0.0759 0.2070 19083619 16.7643 0.9738
67
295 PPC 2010 0.0004 0.0011 11541416 16.2615 1.9662
296 PPC 2011 0.0007 0.0026 11795136 16.2832 2.7685
297 PPC 2012 0.0425 0.1235 12072536 16.3064 1.6680
298 KDC 2010 0.1148 0.1548 5039864 15.4329 0.1269
299 KDC 2011 0.0480 0.0730 5832338 15.5789 0.2613
300 KDC 2012 0.0648 0.0891 5514704 15.5229 0.1452
301 REE 2010 0.0727 0.1243 4961927 15.4173 0.3632
302 REE 2011 0.0968 0.1326 5297325 15.4827 0.0648
303 REE 2012 0.0999 0.1558 6574441 15.6987 0.1835
304 VSH 2010 0.0998 0.1244 3028831 14.9237 0.2134
305 VSH 2011 0.0983 0.1403 3345733 15.0232 0.3326
306 VSH 2012 0.0692 0.0955 3382412 15.0341 0.3277
307 DHG 2010 0.2107 0.2994 1819735 14.4142 0.0100
308 DHG 2011 0.2103 0.3038 1995707 14.5065 0.0153
309 DHG 2012 0.2066 0.2911 2378265 14.6819 0.0115
310 GMD 2010 0.0333 0.0548 6543009 15.6939 0.3840
311 GMD 2011 0.0021 0.0034 6868900 15.7425 0.3206
312 GMD 2012 0.0168 0.0261 6822403 15.7357 0.2848
313 SAM 2010 0.0435 0.0468 2616221 14.7772 0.0228
314 SAM 2011 -0.0686 -0.0810 2637822 14.7855 0.1115
315 SAM 2012 0.0381 0.0450 2756228 14.8294 0.1098
316 MPC 2010 0.0802 0.2328 3894804 15.1752 1.6667
317 MPC 2011 0.0449 0.1844 6325466 15.6601 2.6422
318 MPC 2012 0.0546 0.2076 6269932 15.6513 2.1320
319 BMP 2010 0.2803 0.3229 982153 13.7975 0.0144
320 BMP 2011 0.2525 0.2807 1166487 13.9695 0.0076
321 BMP 2012 0.2534 0.2830 1422668 14.1680 0.0034
322 DRC 2010 0.1843 0.2681 1064193 13.8777 0.2974
323 DRC 2011 0.1219 0.2252 1621589 14.2989 0.5408
324 DRC 2012 0.1260 0.2669 2478090 14.7230 0.7595
325 HRC 2010 0.1896 0.2319 502114 13.1266 0.0198
326 HRC 2011 0.2065 0.2805 620452 13.3382 0.0770
327 HRC 2012 0.1353 0.1835 656835 13.3952 0.2228
328 TBC 2010 0.0487 0.0540 847257 13.6498 0.0353
329 TBC 2011 0.0892 0.0937 849212 13.6521 0.0222
68
330 TBC 2012 0.1408 0.1465 907130 13.7180 0.0110
331 DMC 2010 0.1080 0.1515 766809 13.5500 0.2508
332 DMC 2011 0.0960 0.1392 833996 13.6340 0.2248
333 DMC 2012 0.1062 0.1580 848948 13.6518 0.1357
334 IMP 2010 0.1071 0.1366 751000 13.5292 0.0248
335 IMP 2011 0.0938 0.1095 827689 13.6264 0.0049
336 IMP 2012 0.0901 0.1087 861611 13.6666 0.0000
337 TAC 2010 0.0928 0.2371 944175 13.7581 0.6055
338 TAC 2011 0.0245 0.0716 1031008 13.8460 0.8682
339 TAC 2012 0.0637 0.1688 1001871 13.8174 0.4643
340 SVC 2010 0.0376 0.1210 2357331 14.6730 1.1302
341 SVC 2011 0.0299 0.1099 2724649 14.8179 1.2796
342 SVC 2012 0.0172 0.0638 2714579 14.8141 1.3700
343 PAC 2010 0.1180 0.2709 1103439 13.9139 0.8207
344 PAC 2011 0.0816 0.1762 1187096 13.9870 0.6756
345 PAC 2012 0.0560 0.1210 1145491 13.9513 0.5521
346 TTP 2010 0.1303 0.1709 655404 13.3930 0.0118
347 TTP 2011 0.1012 0.1255 646590 13.3795 0.0000
348 TTP 2012 0.0612 0.0774 668890 13.4134 0.0000
349 VIS 2010 0.0666 0.1899 1657855 14.3210 0.9171
350 VIS 2011 0.0206 0.0520 1318453 14.0920 1.3449
351 VIS 2012 -0.0063 -0.0270 2813626 14.8500 3.0334
352 SJD 2010 0.0684 0.1357 1034376 13.8493 0.8337
353 SJD 2011 0.0894 0.1628 1006379 13.8219 0.7845
354 SJD 2012 0.1527 0.2358 1014481 13.8299 0.4082
355 BMC 2010 0.1371 0.1924 169597 12.0412 0.0000
356 BMC 2011 0.3548 0.4861 257555 12.4590 0.0449
357 BMC 2012 0.3187 0.4243 271042 12.5100 0.0860
358 PGC 2010 0.0413 0.0911 1221358 14.0155 0.3626
359 PGC 2011 0.0291 0.0583 1142145 13.9484 0.2353
360 PGC 2012 0.0520 0.1291 1508558 14.2267 0.6138
361 BHS 2010 0.1437 0.2937 1015192 13.8306 0.6832
362 BHS 2011 0.1149 0.2684 1281737 14.0637 0.8497
363 BHS 2012 0.0566 0.2081 2107835 14.5612 1.9258
364 BT6 2010 0.0819 0.2218 1240755 14.0312 0.6548
69
365 BT6 2011 0.0223 0.0881 1791183 14.3984 1.3678
366 BT6 2012 0.0101 0.0382 1692760 14.3419 1.2381
367 AGF 2010 0.0311 0.0676 1354627 14.1190 0.9301
368 AGF 2011 0.0361 0.0945 1716936 14.3561 1.2572
369 AGF 2012 0.0217 0.0516 1564982 14.2634 1.0258
370 IFS 2010 0.0112 0.0564 648470 13.3824 2.9994
371 IFS 2011 -0.0810 -0.6792 702668 13.4626 5.9657
372 IFS 2012 -0.2216 2.3400 652645 13.3888 -9.7705
373 RAL 2010 0.0314 0.0848 1170010 13.9725 1.4559
374 RAL 2011 0.0429 0.1312 1399951 14.1519 1.7789
375 RAL 2012 0.0486 0.1526 1531241 14.2416 1.8472
376 ABT 2010 0.1560 0.2113 601925 13.3079 0.1388
377 ABT 2011 0.2087 0.2543 478109 13.0776 0.0687
378 ABT 2012 0.1533 0.2058 516133 13.1541 0.2468
379 TCR 2010 0.0562 0.0981 1110748 13.9205 0.4655
380 TCR 2011 0.0513 0.1175 1579470 14.2726 0.8536
381 TCR 2012 0.0021 0.0053 1645710 14.3137 1.0084
382 SSC 2010 0.1915 0.2416 260110 12.4689 0.0197
383 SSC 2011 0.1822 0.2520 315581 12.6622 0.0088
384 SSC 2012 0.1599 0.2533 424017 12.9575 0.0487
385 TMS 2010 0.0808 0.1188 598572 13.3023 0.3900
386 TMS 2011 0.0784 0.1082 623411 13.3430 0.3070
387 TMS 2012 0.0891 0.1170 755678 13.5354 0.1721
388 KHP 2010 0.0837 0.1802 1063900 13.8775 0.7851
389 KHP 2011 0.0734 0.1466 995022 13.8105 0.5471
390 KHP 2012 0.1024 0.2030 1080179 13.8926 0.4627
391 TYA 2010 0.0293 0.1082 785069 13.5735 1.6792
392 TYA 2011 0.0455 0.1256 671370 13.4171 1.2827
393 TYA 2012 0.0542 0.1238 633818 13.3595 0.7125
394 SMC 2010 0.0334 0.1514 2464640 14.7176 1.7358
395 SMC 2011 0.0308 0.1281 2375262 14.6806 1.3333
396 SMC 2012 0.0324 0.1187 2140288 14.5765 1.3191
397 COM 2010 0.0795 0.1033 464327 13.0483 0.0804
398 COM 2011 0.0742 0.0930 448555 13.0138 0.1033
399 COM 2012 0.0404 0.0687 606611 13.3156 0.3878
70
400 HMC 2010 0.0324 0.1163 1086012 13.8980 1.6240
401 HMC 2011 0.0684 0.2379 1198751 13.9968 1.6526
402 HMC 2012 0.0262 0.0797 1038310 13.8531 1.4268
403 HAP 2010 0.0735 0.0937 643134 13.3741 0.0854
404 HAP 2011 0.0143 0.0186 687672 13.4411 0.1602
405 HAP 2012 0.0136 0.0193 757948 13.5384 0.2304
406 GIL 2010 0.0670 0.1006 548928 13.2157 0.3329
407 GIL 2011 0.0881 0.2033 762057 13.5438 0.9539
408 GIL 2012 0.0333 0.0966 888905 13.6977 1.4899
409 CMG 2010 0.0177 0.0500 2153386 14.5826 1.9853
410 CMG 2011 -0.0583 -0.1588 1051992 13.8662 0.4281
411 CMG 2012 0.0063 0.0173 1799571 14.4031 1.9560
412 DHC 2010 0.0599 0.1558 549830 13.2174 1.4291
413 DHC 2011 0.0006 0.0018 763104 13.5451 1.2140
414 DHC 2012 -0.0047 -0.0126 431230 12.9744 1.2194
415 AVF 2010 0.0620 0.3025 1504887 14.2242 3.2177
416 AVF 2011 0.0360 0.1644 1890917 14.4526 3.8482
417 AVF 2012 0.0182 0.0779 1659861 14.3222 2.7800
418 OPC 2010 0.1285 0.1816 401010 12.9017 0.3633
419 OPC 2011 0.1163 0.1682 466917 13.0539 0.5258
420 OPC 2012 0.1155 0.1725 498153 13.1187 0.4644
421 HLA 2010 0.0322 0.1550 2182970 14.5962 3.8113
422 HLA 2011 0.0312 0.1485 2414106 14.6968 4.0857
423 HLA 2012 -0.0475 -0.2414 2410071 14.6952 3.8690
424 SJD 2010 0.0674 0.1448 1034377 13.8493 0.9848
425 SJD 2011 0.0882 0.1676 1006379 13.8219 0.8212
426 SJD 2012 0.1533 0.2561 1014481 13.8299 0.5443
427 ACC 2010 0.2525 0.4020 240124 12.3889 0.3943
428 ACC 2011 0.2486 0.3372 254024 12.4452 0.3221
429 ACC 2012 0.2313 0.3076 276922 12.5315 0.3372
430 JVC 2010 0.1763 0.4562 465858 13.0516 0.6099
431 JVC 2011 0.2201 0.4053 758923 13.5397 1.0196
432 JVC 2012 0.1627 0.3169 1332111 14.1023 0.9100
433 IMP 2010 0.1086 0.1428 751001 13.5292 0.2745
434 IMP 2011 0.0983 0.1196 827689 13.6264 0.1674
71
435 IMP 2012 0.0919 0.1091 861611 13.6666 0.2064
Appendix C:
Decree No. 09/2009/ND-CP dated February 5, 2009 of the Government
promulgating the Regulation on financial management of state companies and
management of state capital invested in other enterprises
REGULATION
ON FINANCIAL MANAGEMENT OF STATE COMPANIES AND MANAGEMENT
OF STATE CAPITAL INVESTED IN OTHER ENTERPRISES.
(Promulgated together with the Government's Decree No. 09/2009/ND-CP of February
5, 2009)
Chapter I
GENERAL PROVISIONS
“…”
Article 2. Interpretation of terms
1. State companies include:
a/ Independent state companies;
b/ State corporations, which are corporations invested and established under decisions
of the State or those invested and established by companies themselves.
2. State business groups, which are groups of companies with the independent legal
entity status and satisfying the conditions specified by law, and business groups without
the independent legal entity status.
3. "Capital invested by the State in state companies" means capital allocated directly
from the state budget to state companies upon their establishment and in the course of
business operation; state capital received from other sources under decisions of
competent authorities; the value of aid, gifts, presents; unclaimed assets, assets found
72
redundant upon inventory of state companies and accounted as an increase in state
capital at state companies; capital supplemented from after-tax profits; land use rights
value and other amounts included in state capital under law.
4. "Assets of state companies'* include fixed assets (tangible fixed assets, intangible
fixed assets, long-term financial investments, expenditures for unfinished capital
construction works and long-term collateral and escrow account amounts); liquid assets
(cash, short-term financial investments, receivables, inventories, other liquid assets and
non-business budgets), which state companies have the right to possess, use and dispose
of under law.
5. "Raised capital of state companies" means capital amounts raised by state companies
through issuance of bonds, borrowing of loans from organizations and individuals at
home and abroad and other forms of capital raising not banned by law.
6. "Preservation of state capital at state companies'" means preventing state capital at
state companies from reduction throughout the course of business operation.
Boards for management and administration of a state company with board of directors
include the board of directors and the directorate (director general and deputy directors
general or director and deputy directors). For state companies without boards of
directors, they are their directorates.
7. "Other enterprises" means enterprises operating under the Law on Enterprises or the
Law on Cooperatives.
8. "State capital invested in other enterprises" means capital invested in other
enterprises by the State or state companies.
9. "Representative of a state company's capital contributed at other enterprises" means a
person authorized by the owner of a state company to represent its state capital invested
in other enterprises.
10. "Representative of the owner of a state company" means an agency decentralized or
authorized by the Government to perform the function of representing the owner,
73
including the Prime Minister, line ministers, presidents of provincial-level People's
Committees, and boards of directors of groups, corporations or parent companies.
11. "Owner of state capital in other enterprises" means a state company or an agency
decentralized or authorized by the Government to act as an owner of state capital in
other enterprises.
“…”
ON BEHALF OF THE GOVERNMENT
Prime Minister
NGUYEN TAN DUNG.
Appendix D:
Decision No. 55/2009/QD-TTg of April 15, 2009, on holding rates of foreign
investors on the Vietnamese securities market.
Decision
on holding rates of foreign investors on the Vietnamese securities market.
THE PRIME MINISTER
Pursuant to the December 25, 2001 Law on Organization of the Government;
Pursuant to the November 29, 2005 Law on Enterprises; Pursuant to the November 29,
2005 Law on Investment; Pursuant to the June 29, 2006 Law on Securities;
Pursuant to the Government’s Decree No. 139/2007/ND-CP of September 5, 2007,
guiding in detail a number of articles of the Law on Enterprises; Pursuant to the
Government’s Decree No. 108/2006/ND-CP of September 22, 2006, detailing and
guiding a number of articles of the Law on Investment;
74
At the proposal of the Minister of Finance,
DECIDES:
Article 1. In this Decision, foreign investors include the following institutions and
individuals:
1. Institutions established and operating under foreign laws and their overseas and
Vietnam-based subsidiaries.
2. Institutions established and operating in Vietnam with foreign capital contributions
accounting for more than 49%.
3. Investment funds and securities investment companies with foreign capital
contributions accounting for more than 49%.
4. Foreign individuals who do not bear the Vietnamese nationality and reside overseas
or in Vietnam.
Article 2. Foreign investors that purchase and sell securities on the Vietnamese
securities market are allowed to hold:
1. For stocks: up to 49% of total number of stocks of a public joint-stock company.
In case it is otherwise provided for by specialized laws, provisions of these laws will
apply. In case the foreign holding rates are classified according to the list of specific
occupations and business lines, this classification list will apply.
2. For public investment fund certificates: up to 49% of total number of investment fund
certificates of a public securities investment fund.
3. For public securities investment companies: Up to 49% of charter capital of a public
securities investment company
4. For bonds: Issuing institutions may set holding limits applicable to foreign holders of
their outstanding bonds.
75
Article 3. Foreign securities trading institutions may participate in founding Vietnam-
based securities companies or fund management companies as follows:
1. Only foreign securities trading institutions may pool capital to found or purchase
shares from securities companies with a maximum foreign holding rate of 49% of
charter capital of these companies.
2. Only foreign securities trading institutions engaged in managing securities
investment funds and foreign insurance business institutions may pool capital to found
or purchase shares from fund management companies with a maximum foreign holding
rate of 49% of charter capital of these companies.
Article 4. This Decision takes effect on June 1, 2009, and replaces the Prime Minister’s
Decision No. 238/2005/QD-TTg of September 29, 2005. In case of implementing
Article 1 of this Decision, foreign investors hold securities at a rate higher than that
specified in Article 2, they may keep their current holding rate unchanged and may only
sell securities whenever they wish to trade in securities.
Article 5. The Minister of Finance shall guide the implementation of this Decision.
Ministers, heads of ministerial-level agencies and government attached agencies,
presidents of provincial-level People’s Committees, chairpersons of boards of directors,
directors general of state economic groups and corporations 91, and concerned
institutions and individuals shall implement this Decision.
Prime Minister
NGUYEN TAN DUNG.
Appendix E:
76
Law on Enterprise. No. No. 60-2005-QH11 approved by the National Assembly of
the Socialist Republic of Vietnam on the 29th day of November 2005
LAW
ON
ENTERPRISES
Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam as amended and
supplemented by Resolution 51-2001-QH10 dated 25 December 2001 of Legislature X
of the National Assembly at its 10th session.
This Law provides for enterprises.
“…”
Article 104 Passing of resolutions of General Meeting of Shareholders
1. The General Meeting of Shareholders shall pass resolutions which fall within its
power by way of voting in the meeting or collecting written opinions.
2. If not regulated by the charter of the company, then a resolution of the General
Meeting of Shareholders on the following matters must be passed by way of voting at
the General Meeting of Shareholders:
(a) Amendment of or addition to the charter of the company;
(b) Approval of the development direction of the company;
(c) Decision on classes of shares and the total number of shares of each class which
may be offered for sale;
(d) Appointment, discharge or removal members of the Board of Management and
Inspection Committee;
(dd) Decisions on investments or the sale of assets valued at equal to or more than fifty
(50) per cent of the total value of assets recorded in the most recent financial statement
of the company, if the charter of the company does not stipulate another percentage;
(e) Approval of the annual financial statements;
(g) Reorganization or dissolution of the company.
77
3. A resolution of the General Meeting of Shareholders shall be passed in a meeting
when all the following conditions are satisfied:
(a) It is approved by a number of shareholders representing at least sixty five (65) per
cent of the total voting shares of all attending shareholders; the specific percentage shall
be stipulated in the charter of the company.
(b) In respect of resolutions on classes of shares and total number of shares of each class
which may be offered; on amendments of and additions to the charter of the company; on
re-organization or dissolution of the company; in respect of investments or sale of assets
equal to or more than fifty (50) per cent of the total value of assets recorded in the most
recent financial statement of the company, unless otherwise provided by the charter of the
company, the approval by a number of shareholders representing at least seventy five
(75) per cent of the total voting shares of all attending shareholders shall be required; the
specific percentage shall be stipulated in the charter of the company.
(c) Voting to elect members of the Board of Management and of the Inspection
Committee must be implemented by the method of cumulative voting, whereby each
shareholder shall have as his total number of votes the total number of shares he owns
multiplied by the number of members to be elected to the Board of Management or
Inspection Committee, and each shareholder shall have the right to accumulate all his
votes for one or more candidates.
4. Resolutions passed by the General Meeting of Shareholders with the number of
shareholders directly or by authorized persons participating which represents one hundred
(100) per cent of the total number voting shares shall be legal and shall be immediately
effective even if the order and procedures for convening the meeting and the contents of
the meeting agenda and the procedures for conducting the meeting were not implemented
correctly in accordance with the regulations.
5. Where a resolution is passed by collecting written opinions, a resolution of the
General Meeting of Shareholders shall be passed when it is approved by a number of
78
shareholders representing at least seventy five (75) per cent of the total voting shares. The
specific percentage shall be stipulated in the charter of the company.
6. Resolutions of the General Meeting of Shareholders must be notified to shareholders
entitled to attend the General Meeting of Shareholders within fifteen (15) days from the
date of approval thereof.
“…”
Chairman of the National Assembly
NGUYEN VAN AN.
