How Does the Government Choose Privatization Mode? Evidence from Vietnam

The Vietnamese government partially privatizes large, well-performing, and less-leveraged firms rather than fully divesting ownership in these companies. There is a time gap between privatization and stock listing in Vietnam, and partially privatized firms are more likely to go public than fully privatized ones. The state keeps the majority of control rights of partially privatized firms, even several years after the stock listing. Partially privatized firms retrench employees significantly less than fully privatized firms do. These results suggest that the Vietnamese government takes advantage of partial privatization to increase good-quality listed firms that protect their employees. Full privatization is more effective with layoffs and debt restructuring than partial privatization