The dynamic relationship between greenfield investments, cross-border M&As, domestic investment and economic growth in Vietnam

Funding: NAFOSTED (grant number 502.02-2020.09).This paper investigates the dynamic linkages between different types of foreign direct investment (FDI), domestic investment and economic growth in Vietnam. We decompose the aggregated FDI level into its two major components: greenfield investments, and cross-border mergers and acquisitions (M&As). The empirical results reveal that greenfield investments and cross-border M&As exhibit different impacts on economic growth. While greenfield investments appear to complement domestic investment, which subsequently promotes long-run economic growth, cross-border M&As exert a significant crowd-out effect and subsequently impede growth in both the short- and the long-run. These results provide important implications for policies to attract FDI in order to stimulate sustainable growth.Publisher PDFPeer reviewe

The impact of recentralisation on FDI : evidence from a quasi-natural experiment

This research is funded by Vietnam National Foundation for Science and Technology Development (NAFOSTED) under Grant No. 502.02-2020.09.Although decentralised governance has been one of the most salient political regimes worldwide over the past few decades, many countries have started to realise various shortcomings associated with their decentralisation process. As a consequence, a number of central governments have attempted to pursue recentralisation reforms in order to reclaim authority from the localities. This government reform can lead to significant changes in institutional arrangements, and subsequently, may influence various aspects of socio-economic activities. However, the real impact of recentralisation reform still remains ambiguous. In this paper, we examine how recentralisation may affect foreign direct investment (FDI) inflows. We exploit the pilot recentralisation reform that temporarily abolished the intermediate legislative branches in some provinces in Vietnam as a quasi-natural experiment. The result shows that recentralisation leads to a significant reduction in FDI inflows. Our results are robust to a number of sensitivity analyses and falsification tests. Overall, our findings contribute to the literature on the determinants of FDI and provide new evidence on the real effect of recentralisation reform.Publisher PDFPeer reviewe

Organizational culture, competition and bank loan loss provisioning

This paper investigates how banks with different organizational cultures (defined as either control-dominant, collaborate-dominant, compete-dominant, create-dominant) manage their loan loss provisions (LLPs) in response to intensified industry competition. For identification, we utilize the change in state-level competition that followed the passage of the US Interstate Banking and Branching Efficiency Act (IBBEA) of 1994 as a quasi-natural experiment. We find that banks with a collaborate-dominant organizational culture are less likely to exercise discretion over LLPs. In contrast, banks with compete- and create-dominant organizational cultures are more likely to utilize discretionary LLPs when competition increases. Moreover, banks use discretionary LLPs to smooth income and signal private information to outsiders. Banks with collaborate-dominant organizational cultures exhibit less income smoothing. Counterparts with a create-dominant organizational culture use discretionary LLPs to signal information to outside stakeholders. Finally, banks with a create-dominant organizational culture are more likely to be subject to formal regulatory enforcement actions.Publisher PDFPeer reviewe

The impact of corruption on the performance of newly established enterprises : empirical evidence from a transition economy

This paper investigates the effects of corruption on the performance of newly established enterprises. Using longitudinal data from enterprise surveys containing virtually all firms over the period from 2011 to 2015 in Vietnam, we find that corruption deteriorates firm financial performance, and subsequently exposes them to a greater failure probability. We further find that, while corruption imposes more harmful effects on the performance and survival of private domestic firms, it exerts no significant impact on state-owned firms. On the other hand, foreign firms are also able to take advantage of corruption to enhance their performance and survivability. In addition, our results suggest that the more mature firms are better at dealing with corruption and can eventually take advantage of it to enhance their performance. The results are robust after various model specifications as well as alternative classifications of newly established firms.Publisher PDFPeer reviewe

The impact of recentralization reform on corruption: evidence from a quasi-natural experiment

How does government recentralization reform affect corruption? We utilize the pilot recentralization reform that transforms the legislative function, power, and responsibility of the district-level authorities to the higher level of the government organ in Vietnam as a quasi-natural experiment to address the aforementioned question. We find strong evidence that recentralization reform leads to lower corruption. The result illustrates that, among the firms which have the highest probability of making a bribe payment, those incorporated in jurisdictions experiencing the recentralization reform are 4.3% less likely to pay a bribe. In addition, the perception that bribery is a common and necessary practice is also significantly lowered in the post-recentralization period. We further show that the impact of recentralization is stronger for firms which lack a political connection. Overall, these results shed light on the real impact of the government recentralization reform and also the determinants of corruption, thereby providing important policy implications for policymakers to create a more conducive business environment

Greenfield investments, cross-border M&As, and economic growth in emerging countries

This paper investigates the effect of foreign direct investment (FDI) on economic growth in emerging countries through its two major entry modes: Greenfield investments and cross-bor-der mergers and acquisitions (M&As). We found that both Greenfields and M&As contribute positively to accelerating growth. In addition, emerging countries could obtain more benefits from Greenfields and M&As if the human capital levels were enhanced. We also found that while growth did not have any significant impact on Greenfield investment levels, lower eco-nomic growth could lead to higher M&A flows

Contemporary issues in the US financial services industry

This thesis comprises three empirical studies, which investigate selected contemporary issues in the US financial services industry. The first study, entitled “Organizational Culture, Competition and Bank Loan Loss Provisioning” examines the extent to which organizational culture affects bank loan loss provisioning practices following changes to the competitive environment. I use a textual analysis approach in conjunction with the so-called Competing Values Framework in order to measure various types of organizational culture (including control, collaborate, compete and create cultures). The results of a difference-in-difference analyses suggest that banks with a control culture exercise less discretion over loan loss provisions. Compete and create banks use more discretionary loan loss provisions when industry competition increases. These results provide novel cultural-based evidence to explain why banks behave differently following changes to the competitive environment. As such, this chapter contributes to the literature on: bank loan loss provisioning practices, bank competition, and organizational culture. The second study, entitled “Does shareholder discipline benefit banking stability? Evidence from a quasi-natural experiment”, investigates the impact of shareholder litigation rights on bank stability. As a quasi-natural experiment, I exploit the staggered adoption of the Universal Demand laws (which weakened the litigation rights of bank shareholders in listed banks) across numerous US states. The results of a difference-in-differences analysis suggest that weakened shareholder litigation rights enhance bank stability. Overall, this finding provides novel evidence that shareholder litigation rights may not be an effective corporate governance mechanism in constraining bank risk. In the third study entitled “Strategic Relatedness and Mergers and Acquisitions Outcomes: Empirical Evidence from US Credit Unions”, I use the US credit union industry as a laboratory to examine the impact of strategic relatedness on deal initiations and merger and acquisition (M&As) outcomes. The results of an extensive empirical analysis suggest that if two credit unions are strategically related, they are more likely to merge. However, these types of merger destroy value

How do human resource management practices affect innovation of small- and medium-sized enterprises in a transition economy?

Small- and medium-sized enterprises (SMEs) are one of the engines for inclusive economic growth. Yet little is known about the contribution of human resource management (HRM) practices to the success of SMEs. This study empirically examines how HRM practices determine different categories of innovation of SMEs in the context of a transition economy. Using a longitudinal dataset and applying the instrumental variable methodology to correct for endogeneity problems, our study uncovers that HRM practices positively affect the quality of employed human and physical capital assets of SMEs. More importantly, we find that that HRM practices significantly contribute to the launch of new products and improvement of existing products. In addition, we also find that the adoption of HRM practices facilitate labour productivity and value added. Taken together, these findings highlight that HRM practices are a strategic resource for innovation and development of SMEs in transition economies by rewarding them with higher-quality capital assets

How do human resource management practices affect innovation of small- and medium-sized enterprises in a transition economy?

Small- and medium-sized enterprises (SMEs) are one of the engines for inclusive economic growth. Yet little is known about the contribution of human resource management (HRM) practices to the success of SMEs. This study empirically examines how HRM practices determine different categories of innovation of SMEs in the context of a transition economy. Using a longitudinal dataset and applying the instrumental variable methodology to correct for endogeneity problems, our study uncovers that HRM practices positively affect the quality of employed human and physical capital assets of SMEs. More importantly, we find that that HRM practices significantly contribute to the launch of new products and improvement of existing products. In addition, we also find that the adoption of HRM practices facilitate labour productivity and value added. Taken together, these findings highlight that HRM practices are a strategic resource for innovation and development of SMEs in transition economies by rewarding them with higher-quality capital assets