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International Econometric Conference of Vietnam

ECONVN 2019: Beyond Traditional Probabilistic Methods in Economics pp 1142–1153Cite as

The Firm Performance – Overinvestment Relationship Under the Government’s Regulation

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Part of the book series: Studies in Computational Intelligence ((SCI,volume 809))

Abstract

With the purpose of identifying the negative association between overinvestment caused by agency problems and firm performance measured through profitability, the research employs the dataset of Thomson Reuters covering 669 Vietnamese non-financial listed companies in the period of 2012–2016. Applying the fixed effect technique to measure overinvestment and run the main econometric model, the paper finds that overinvestment is the cause leading to ineffective operations because it decreases firm profitability. The negative association between firm performance and overinvestment can be regulated with the intervention of the government through state ownership. The regulation impact of state ownership will be stronger in companies that has state ownership rate lower than 50%.

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Notes

  1. 1.

    See Appendix for the description of all variables.

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Author information

Authors and Affiliations

  1. School of Accounting – Banking – Finance, Ho Chi Minh City University of Technology, Ho Chi Minh City, Vietnam

    Chau Van Thuong & Nguyen Cong Thanh

  2. School of Economics, Erasmus University Rotterdam, The Hague, The Netherlands

    Tran Le Khang

Authors
  1. Chau Van Thuong
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  2. Nguyen Cong Thanh
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  3. Tran Le Khang
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Corresponding author

Correspondence to Tran Le Khang .

Editor information

Editors and Affiliations

  1. Department of Computer Science, University of Texas at El Paso, El Paso, TX, USA

    Vladik Kreinovich

  2. Banking University HCMC, Ho Chi Minh City, Vietnam

    Nguyen Ngoc Thach

  3. Banking University HCMC, Ho Chi Minh City, Vietnam

    Nguyen Duc Trung

  4. TTC Group, Ho Chi Minh City, Vietnam

    Dang Van Thanh

Appendixes

Appendixes

Table A1. Variable Measurement for main econometric model
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Table A2. Variable measurement for subequation
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Van Thuong, C., Thanh, N.C., Le Khang, T. (2019). The Firm Performance – Overinvestment Relationship Under the Government’s Regulation. In: Kreinovich, V., Thach, N., Trung, N., Van Thanh, D. (eds) Beyond Traditional Probabilistic Methods in Economics. ECONVN 2019. Studies in Computational Intelligence, vol 809. Springer, Cham. https://doi.org/10.1007/978-3-030-04200-4_84

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