Economic and Management issues of firms in Vietnam: Productivity, multinational profit shifting, and ownership changes

This thesis is comprised of three essays which explore economic and management issues of firms in Vietnam. The issues being addressed here are varied but connected to highlight (partly) how firms are doing business in the transition economy of Vietnam. The first essay examines ownership differential (i.e. state-owned, private-owned, and foreign-owned) and competition effect on firm total factor productivity (TFP) as consequences of mixed economic reforms in Vietnam (Chapter 2). It describes the big picture: the whole transition process/institutional changes in Vietnam and how such changes are reflected in competition effect on firm TFP and comparative performance (in terms of TFP) of firms with different ownership types. The next two essays deal specifically with foreign firms' subsidiaries in Vietnam. One essence of the economic reform of Vietnam is its “open-door policy” to foreign direct investment (FDI) and international trade. While many benefits of FDI have been identified, in the second essay, an unwanted consequence of FDI is dealt with instead. Specifically, it examines whether foreign multinational firms undertake tax-avoidance profit shifting out the country (Chapter 3). Using a newly developed identification approach in the literature, the essay examines how corporate income tax-rate differentials between the home country and Vietnam determine a foreign wholly-owned subsidiary’s under-reporting of the profit obtained from an exogenous income shock in Vietnam. The third essay then investigates post-formation conversion of international joint ventures (JVs) to either wholly-owned subsidiaries (WOSs– 100% foreign ownership) or domestic firms (DOMs– 100% domestic ownership) in Vietnam. In this essay, both the drivers of such ownership transfers and their performance implications are investigated (Chapter 4).