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PROCEEDINGS THE SECOND INTERNATIONAL CONFERENCE ON THE SUSTAINABLE ECONOMIC DEVELOPMENT AND BUSINESS MANAGEMENT IN THE CONTEXT OF GLOBALISATION (SEDBM 2019) Volume INTERNATIONAL CONFERENCE 2019 ACADEMY OF FINANCE PROCEEDINGS THE SECOND INTERNATIONAL CONFERENCE ON THE SUSTAINABLE ECONOMIC DEVELOPMENT AND BUSINESS MANAGEMENT IN THE CONTEXT OF GLOBALISATION (SEDBM 2019) Volume INTERNATIONAL CONFERENCE 2019 FINANCIAL PUBLISHING HOUSE WELCOME NOTES Dear Friends and Colleagues, We are pleased to welcome you to the 2nd International Conference: “Sustainable Economic Development and Business Management in The Context of Globalisation” (SEDBM 2019) The 2nd International Conference SEDBM 2019 brings together the world-leading experts in finance, accounting, audit, economic and business administration, serving as a point of convergence for researchers, practitioners and policymakers to meet, share and exchange their ideas The 2nd International Conference SEDBM 2019 will strive to offer not only plenty of networking opportunities, providing you with the opportunity to interact with the leading researchers from both academia and universities, but also an environment to engage in stimulating discussions about research topics and practices We are especially honoured to have: Associate Professor Simone Domenico Scagnelli - School of Business and Law, Commerce Discipline, Edith Cowan University, Australia PH.D., Senior Lecturer Jaime Yong, Course coordinate for Finance, School of Business and Law, Edith Cowan University, Australia We are indebted to members of the Organizing Committee for their support to make this International Conference a great success We wish you all an intellectually stimulating and productive conference! On behalf of the Organizing Committee, Nguyen Trong Co ASSOCIATE PROFESSOR NGUYEN TRONG CO PRESIDENT OF ACADEMY OF FINANCE Assoc Prof Nguyen Trong Co is the President of Academy of Finance He has been working for the Academy since his graduation and in different positions such as lecturer, Head of Financial Analysis Department, Deputy Head of Human Resources Department before becoming Vice President of the Academy He was nominated as the President of Academy of Finance in 2014 and has been in that position to present He is the Editor-in-Chief of the Journal of Finance and Accounting Research, Vice President of the Scientific Board of Finance Research and member of the Scientific Board of Banking Research He was awarded the honor membership of FCPA Australia Assoc Prof Nguyen Trong Co is the author/co-author of more than 21 valuable textbooks and reference books such as “Financial Analysis”, Finance Publishing House, 2017; “Auditing Management and the use of Mineral Resources for Sustainable Development in Vietnam”, Finance Publishing House, 2016, etc He has completed and published more than 20 research projects covering a wide range of research topics such as corporate finance, public finance and technological market, etc He has also published more than 70 articles in both local and international journals ASSOCIATE PROFESSOR SIMONE DOMENICO SCAGNELLI SCHOOL OF BUSINESS AND LAW, COMMERCE DISCIPLINE, EDITH COWAN UNIVESITY, AUSTRALIA Dr Scagnelli got awarded his Ph.D in 2005 from the University of Turin, in Italy, with a thesis focussing on the accountability and measurement issues of Management Information Systems Prior to joining ECU as Associate Professor, Dr Scagnelli was Associate Professor at the Department of Management, University of Turin, Italy, and was the Head of International Relations and Director of the International Bachelor in Business & Management From 2012 to 2018, he was also Adjunct Professor of Financial & Managerial Accounting at ESCP Europe, one of the top Business Schools in the World Dr Scagnelli’s research has been mostly in Accounting, with a particular focus on Corporate Social Responsibility He has presented at leading international conferences and published in scholarly international journals such as the Australian Accounting Review, Corporate Social Responsibility and Environmental Management, and Pacific Accounting Review His international research partnerships span the countries of Italy, UK, Germany, Russia, Australia and Japan, where has obtained a number of research grants.He has also supervised research students to completion at the PhD level Dr Scagnelli has also developed an extensive experience in the industry Prior to joining Academia, he was associate partner at a leading Italian Law and Accounting firm, providing advisory services to national and multinational companies in the Automotive, Aerospace and ICT industries 406 PROCEEDINGS OF THE SUSTAINABLE ECONOMIC DEVELOPMENT AND BUSINESS MANAGEMENT IN THE CONTEXT OF GLOBALISATION of stock exchanges In particular, there are 20 securities companies with capital scale of less than VND 300 billion to perform one or several business operations (as prescribed in Article 18 of Decree No 14/2007 / ND-CP, securities companies want to fully implement enterprises for business, the minimum charter capital is VND 300 billion) In the period of 2013-2018, these securities companies had very low rate of return, were unstable and even had negative values With its especially important role in the stock market, if these securities companies not improve and increase the profitability ratio, it will greatly affect the stock market, the confidence of investors and businesses and affect the existence of securities companies on the market Therefore, the study of internal factors affecting the profitability of small-scale securities companies in Vietnam today is very necessary and useful for securities companies and the entire stock market OVERVIEW OF RESEARCH AND THEORETICAL FRAMEWORK The profitability ratio of an enterprise is usually measured by ROA (return on total assets), ROS (return on total revenue) and ROE (return on equity ratio) With the ROA, assess the level of net interest generated on all assets invested, including assets financed by equity, and assets financed by debt Meanwhile, the ROE index assesses the net interest generated from equity, which only concerns the owner’s equity without mentioning the funding from the creditor; while the ROS indicator assesses the net profit generated from the business revenue Because the study refers to the rate of return on assets invested by businesses, regardless of their funding sources, the ROA is appropriate The ROA reflects how much of an after-tax profit an average dollar of net worth will bring This is a quite comprehensive indicator in assessing business performance of a business The magnitude of this indicator is high, showing the high efficiency in using assets of the enterprise This indicator is also considered as a criterion to evaluate the success in business operations of the enterprise ROA is measured by profit after tax divided by average total assets, so ROA is directly affected by two factors: profit after tax and average total assets In fact, according to many studies, ROA is affected by many internal factors, specifically as follows: According to Rami Zeitun and Gary Gang Tian (2007) in the study: “Capital structure and corporate performance: evidence from Jordan”, ROA is influenced by factors: debt to total assets ratio (TDTA), debt to equity ratio (TDTE), the ratio of short-term debt to total assets (STDTA), the ratio of long-term debt to total assets (LTDTA), revenue growth (GROWTH), asset size (SIZE), the ratio of long-term assets to total assets (TANG), the corporate income tax rate (TAX), in which the growth, scale, tax and capital structure variables include TDTA, TDTE, STDTA, LTDTA all have significant and positive effects on ROA, particularly the TANG variable has a negative and significant impact on ROA According to Fozia Memon, Niaz Ahmed Bhutto and Ghulam Abbas (2012) in the study: “Capital Structure and Firm Performance: A case of Textile Sector of Pakistan” ROA is influenced by the ratio of debt to total assets (TDTA) , company size (SIZE), ratio of long-term assets to total assets (TANG), taxes (TAX) and growth (GROWTH), in which the ratio of debt to total assets, PROCEEDINGS OF THE SUSTAINABLE ECONOMIC DEVELOPMENT AND BUSINESS MANAGEMENT IN THE CONTEXT OF GLOBALISATION 407 size of the company and the ratio of long-term assets to total assets has a negative effect on return on assets (ROA) while tax and growth variables have a positive impact on return on assets (ROA) According to research by Abor [1, pp.438-445], Kouser et al [10, p58-64], Devi [5, pp.8791], the more businesses use debt, businesses enjoy benefit from the tax shield, increasing the profitability ratio of the business, it means the debt to total assets ratio (TDDA) is positively related to the ROA Meanwhile, on other research samples, the debt to total assets ratio (TDDA) has the opposite effect on the profitability ratio of enterprises, such as Biger et al [4, p.307) -326], Afza and Hussian [2, p.219-230], Dogan [6, p53-59] Research by Biger et al [4, p.307-326] stated that the debt ratio of an enterprise is sector dependent From that, it shows that the direction of the impact of financial leverage on profitability is depending on the research sample, which is related to business factors, research period THEORETICAL AND RESEARCH MODEL From theories and empirical research results, the study selects some intrinsic factors that are suitable and statistically significant to put into the model with the following hypotheses: H1: Scale (ASSET) is positively related to profitability ratio (ROA) H2: Revenue growth (GROWTH) is positively related to ROA H3: The ratio of long-term assets (TANG) has the negative effect to ROA Inside: - Scale is measured in logarithms of total assets Because, in terms of similarity in magnitude between variables, the remaining independent variables are all measured by the ratio of value not exceeding time (or 100%), while the scale variable has the price the value is too large (unit is VND billion) - Revenue growth is measured by the increase (decrease) in revenue of the following year compared to the previous year - Percentage of long-term assets is measured by long-term assets divided by total assets Proposed research model: ROAit = β0 + β1ASSETit + β2GROWTHit + β3TANGit + uit Inside: β0: Constant β1, β2, β3: Regression coefficients corresponding to the independent variables uit is the remainder of the model ROA: is a dependent variable 408 PROCEEDINGS OF THE SUSTAINABLE ECONOMIC DEVELOPMENT AND BUSINESS MANAGEMENT IN THE CONTEXT OF GLOBALISATION ASSET, GROWTH, TANG are independent variables The study selected ROA as a dependent variable, not ROE or ROS because after running the model, the results only make sense for ROA Moreover, according to the research review and the theoretical basis mentioned above, the ROA is appropriate RESEARCH METHODOLOGY The study used data of financial statements of 20 securities companies with capital of less than VND 300 billion and was a member of Ho Chi Minh Stock Exchange in 2013-2018 period with 120 observations Research using the software STATA 13, conducting correlation analysis between variables, building regression models and testing models The study explains the degree of impact of independent variables on the dependent variable from the research results The research uses correlation analysis method to determine the relationship between independent variables and dependent variables; follow the Hausman test to select the appropriate model, then conduct the necessary tests on the model such as multicollinearity test, self-correlation test, test of variance of change; Finally, using weighted regression (GLS) to handle model errors to select and estimate efficiency RESULTS AND DISCUSSION 5.1 Research results Study on testing correlation coefficients between variables of the model Test results of correlation coefficient between independent variables and dependent variables have P-value Chi2 = 0.9005 (greater than 0.05), so the REM model is suitable Table 3: Regression results according to the random effects model (REM) Source: Authors’ research on STATA software Regression results of the random effects model (Table 3) show that the Prob value of the model and the P-value of the parameters are less than 0.05, proving that the model and the variables are statistically significant, ie, the appropriate model and the independent variables affecting the dependent variable (ROA), the sign of the regression coefficients also matches the expected sign Asset size and revenue growth have a positive impact on ROA while long-term assets to total 410 PROCEEDINGS OF THE SUSTAINABLE ECONOMIC DEVELOPMENT AND BUSINESS MANAGEMENT IN THE CONTEXT OF GLOBALISATION assets ratio has a negative effect on ROA Next, the research conducted multi-collinear testing between variables in the model, testing the autocorrelation phenomenon and testing the variance of changes Multicollinearity test results shown in Table show that the independent variables have a value of VIF
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