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Corruption and Firm Financial Performance: New Evidence from Vietnam

Author

Listed:
  • Huong Vu Van

    (Academy of Finance, Hanoi)

  • Tuyen Quang Tran

    (University of Economics and Business, Vietnam National University, Hanoi)

  • Tuan Van Nguyen

    (University of Dalat, Vietnam)

  • Lim Steven

    (University of Waikato, New Zealand)

Abstract

Using a nationwide survey of provincial institutional quality and a sample of private manufacturing small and medium scale enterprises (the SMEs), this paper is the first to examine the effects of corruption on financial performance of the Vietnamese private SMEs. Interestingly, contrary to previous findings, the study finds that corruption as measured by a dummy variable does not affect firms’ financial performance after controlling for heterogeneity, simultaneity and dynamic endogeneity. However, we find that the intensity of bribe and many types of corruption have negative impacts on firms’ financial performance. Thus, a typical approach using only a dummy variable of bribe might not adequately evaluate the impact of bribe intensity or even ignored negative impacts of some types of bribe on firms’ financial performance. Our findings imply that anti-corruption measures are necessary to the development of the Vietnamese private SMEs.

Suggested Citation

  • Huong Vu Van & Tuyen Quang Tran & Tuan Van Nguyen & Lim Steven, 2017. "Corruption and Firm Financial Performance: New Evidence from Vietnam," Working Papers 1, Development and Policies Research Center (DEPOCEN), Vietnam.
    • Handle: RePEc:dpc:wpaper:0117
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    References listed on IDEAS

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    Cited by:

    1. Nirosha Hewa Wellalage & Stuart Locke & Helen Samujh, 2019. "Corruption, Gender and Credit Constraints: Evidence from South Asian SMEs," Journal of Business Ethics, Springer, vol. 159(1), pages 267-280, September.

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    Keywords

    Corruption; financial performance; SMEs; institutional quality; Vietnam;
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