Factors Affecting Financial Risk: Evidence from Listed Enterprises in Vietnam

Abstract

This paper analyzes factors affecting enterprise's financial risk listed on the Vietnam stock market. The panel data of research sample includes 524 non-financial listed enterprises on the Vietnam stock market for a period of eleven years, from 2009 to 2019. The Generalized Least Square (GLS) is employed to address econometric issues and to improve the accuracy of the regression coefficients. In this research, financial risk is measured by the Alexander Bathory model. Debt structure, Solvency, Profitability, Operational ability, Capital structure are independent variables in the study. Firm Size, firm age, growth rate are control variables. The model results show that in order to prevent and limit financial risk for enterprises listed on the Vietnam Stock Market, attention should be paid to variables reflecting Liability structure ratio, Quick Ratio, Return on Assets, Total asset turnover, Accounts receivable turnover, Net assets ratio and Fixed assets ratio. The empirical results show that there are differences in the impact of these factors on the financial risk in state-owned enterprises and non-state enterprises listed on the Vietnam stock market. The findings of this article are useful for business administrators, helping business managers make the right financial decisions to improve the efficiency of financial risk management in enterprises.

Integrated Reporting Disclosure and Its Implications on Investor Reactions

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“…Profitability reflects the ability to generate a profit of a unit of cost or input or output that reflects the business results. When the business activities of industrial enterprises are favorable, creating conditions for increasing profits, the profitability of enterprises also increases (Dang et al, 2020). Rouf (2011), Bidaki and Hejazi (2014), and Kurniawan and Wahyuni (2018) proved that profitability had a positive relationship with the company's information disclosure level.…”

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“…Interim financial reporting is one of the emerging issues in the reporting systems due to the COVID-19 emergency. The evaluation results show that IFRS supports the adjustment of the existing policies to cope with the current pandemic situation (Dang et al, 2020). The reporting timing has been reduced, and the disclosure has been amended in IFRS-9 that guide the reporting of ECL.…”

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“…The results of the Johansen cointegration test indicate at least three cointegrating equations exist at the 0.05 level in the model, confirming that there is a long-run equilibrium relationship between stock prices and macroeconomic variables in Korea. In Vietnam, Dang et al,(2020) In this research, financial risk is measured by the Alexander Bathory model. Debt structure, Solvency, Profitability, Operational ability, Capital structure are independent variables in the study.…”