The research results also show that the profit of the enterprises is influenced by different factors: business size, age, leverage ratio, profitability, debt to equity ratio and structur
FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS -*** MIDTERM ASSIGNMENT DETERMINANTS OF THE BUSINESS PERFROMANCE OF ENTERPRISES IN VIETNAM IN 2019 Class: KTEE309.2 Group: 18 Instructor: Dr Đinh Thị Thanh Bình No Full Name Student ID % of Contribution Lê Phương Anh 2112150011 25% Nguyễn Đặng Quỳnh Anh 2112150012 25% Nguyễn Diệu Linh 2113150039 25% Bùi Nguyễn Hải Quỳnh 2113150059 25% Hanoi, December 2022 TABLE OF CONTENT INTRODUCTION CHAPTER THEORETICAL FRAMEWORK AND LITERATURE REVIEW 1.1 Theoretical Framework 1.1.1 Overview of business performance of enterprises 1.2 Literature Review 1.2.1 Research into factors affecting business performance of enterprises 1.2.2 Justification of research gap 11 1.3 Factors affecting the business performance of enterprises and research hypothesis 11 1.3.1 Age of business 11 1.3.2 Firm size: 11 1.3.3 Leverage ratio: 12 1.3.4 Liquidity ratio 12 1.3.5 Asset structure 13 1.3.6 Debt ratio 13 CHAPTER RESEARCH METHODS AND RESEARCH MODEL 14 2.1 Research Design 14 2.1.1 Model building methods 14 2.1.2 Data collecting methods 14 2.1.3 Data analysis methods 14 2.2 Research model building 15 2.2.1 Research data 15 2.2.2 Theoretical model specification 15 2.3 Interpretation of variables in model 16 2.4 Data Description 18 2.4.1 Data Sources 18 2.4.2 Descriptive Analysis of Data 18 2.4.3 Correlation analysis 19 CHAPTER ESTIMATION RESULTS, MODEL TESTING AND STATISTICAL INFERENCE 22 3.1 Estimates results and Model testing 22 3.2 Model testing 23 3.2.1 Ramsey RESET test 23 3.2.2 Multicollinearity test 24 3.2.3 Variance error change test (heteroskedasticity test) 24 3.2.4 Standard Normal Distribution 25 3.2.5 Variable variance defects resolution 25 3.3 Statistical hypothesis test 26 3.3.1 Testing the statistical hypothesis test of coefficient terms 26 3.3.2 Testing the statistical significance of coefficient terms 26 3.3.3 Testing and Statistical Inference 29 CHAPTER CONCLUSIONS AND RECOMMENDATIONS FOR VIETNAMESE ENTERPRISES 30 4.1 Recommendations 30 4.2 Conclusions 31 REFERENCES TABLE OF FIGURES TABLE 1: Expected signs of variables and explanation of variables table 15 TABLE 2: Variables’ description 18 TABLE 3:The descriptive statistics table 19 TABLE 4: Correlation table 20 TABLE 5: Relationships among the independent variables 20 TABLE 6: Former estimate of model 22 TABLE 7: Results of former regression parameters 22 TABLE 8: VIF result 24 TABLE 9: Skewess result 25 TABLE 10: Variable variance defect results 25 TABLE 11: Significance of coefficient terms 27 INTRODUCTION In general, business performance is the company’s ability to profit from resources and achieve its objectives This definition is, however, very broad In practice, the term business performance usually refers to the ability of a business to implement a strategy to achieve organizational objectives or key performance indicators (KPIs) and is considered a crucial tool for enterprises to analyze how effective management is at achieving business goals A high financial performance draws the attention of every manager because it plays a vital position within the structure and development of a firm Nonetheless, that aim is often challenged by many factors, leading to a low level of firm performance Understanding the determinants of financial performance is gradually getting necessary for companies in Vietnam to raise their performance level Realizing the importance of business performance, our group has chosen the topic: “Factors affecting the business performance of enterprises in Vietnam in 2019.” This study contains two objectives: (1) Identify the factors that affect the performance of enterprises in Vietnam in 2019 (2) Propose solutions to raise Vietnamese enterprises’ business performance To estimate the factors affecting Vietnam’s business performance in 2019, we use secondary data using convenient sampling techniques from the 2019 Financial Statements of 236 enterprises The database is chosen based on the top 500 best profitable enterprises listed in Vietnam, with the selected analysis criteria in the model The study uses Stata-64.exe software to support data analysis Quantitative statistical methods with criteria such as average, rate, frequency, and standard deviation are applied to analyze the current situation of Vietnamese enterprises’ production and business activities with an adaptation of the regression technique The research results also show that the profit of the enterprises is influenced by different factors: business size, age, leverage ratio, profitability, debt to equity ratio and structure of assets of enterprises On that basis, the article proposes some solutions to improve business performance in Vietnam in the current period The research consists of the following contents: • Introduction • Chapter 1: Theoretical framework and Literature review • Chapter 2: Research design and Regression Model • Chapter 3: Estimation results, Diagnostic tests, and Statistical hypotheses tests • Chapter 4: Suggestions to improve enterprises’ performance Conclusion • We express our most sincere gratitude to Ms Dinh Thi Thanh Binh for her assistance during our research and study We are bound to make mistakes in our final product due to a lack of time and advanced knowledge, but we are eager to receive feedback from the Ph.D.Dinh Thi Thanh Binh to improve our report We send you our faithful wishes for future success! Document continues below Discover more from: Econometrics Trường Đại học Ngoạ… 418 documents Go to course Apparel and Footwear 74 in Vietnam(Full Market… Econometrics 97% (29) ON TAP KINH TE Luong 13 revision Econometrics 100% (12) Kinh tế lượng - AAA 46 Class Econometrics 100% (6) Ethics - SDaa 31 Econometrics 100% (5) A collection of past 17 exams Econometrics 100% (5) Tut 9.1 trm Econometrics 100% (4) CHAPTER THEORETICAL REVIEW FRAMEWORK AND LITERATURE 1.1 Theoretical Framework 1.1.1 Overview of business performance of enterprises Social background The economy - society of our country in 2019 took place amid the world’s slow growth economic situation Trade tensions between the US-China and geopolitical issues significantly increase the instability of the global trading system It has no small impact on global business confidence, investment decisions and trade Unexpected fluctuations in financial markets - international currencies, complex oil prices impact credit growth, psychology and market expectations International organizations are constantly making optimistic forecasts about world economic growth in 2019 Domestic, besides the advantages of positive growth results in 2019, macroeconomics are stable but also face no less difficulties, challenges with complex weather developments affecting crop yields and yields The livestock industry has difficulty with African pig cholera taking place in all 63 provinces and cities under the Central; slowing growth of some key exports; Disbursement of public investment is not planned Vietnam corporations ‘s business performance in 2019 According to the Statistics industry survey at 31/12/2019, Vietnam has 668,505 operating businesses with business production results, an increase of 9.5% compared to the time of 12/31/2018 In particular, in 2019 the proportion of profitable businesses accounted for 43.0%; the proportion of breakeven businesses accounted for 8.2%; The percentage of business enterprises with losses accounted for 48.8% The total capital used for SXKD of the entire operating enterprise with the results of business production at 12/31/2019 reached VND 43.3 million, increased by 11.4% compared to the same time in 2018 The total net revenue of the entire operating business sector with business production results in 2019 reached more than VND 26.3 million, an increase of 11.4% compared to 2018 with industrial and construction businesses with the largest contribution In 2019, the total pre-tax profit of the business sector reached VND 889.9 trillion, down 0.5% compared to 2018 The percentage of profitable businesses in 2019 reached 43.0%, down from 2018 (44.1%) The percentage of business enterprises losing in 2019 reached 48.8%, an increase compared to 2018 (48.4%).TOP 50 in 2019 is still a familiar company in the consumer goods, real estate, construction, industry, etc industries, ,… In particular, the real estate industry group has many leading units honored such as Vinhomes, Novaland, Khang Dien, Nam Long with revenue and profit indicators, Impressive capitalization value Return on Asset ROA - net profit to asset ratio (Return on total assets), is the company's profitability measurement indicator of how profitable a company is relative to its assets or the resources it owns or controls Return on Assets (ROA) = Net Income/Total Assets The ROA provides investors with information about the interest generated from the amount of investment ( or the amount of assets ) A company's assets are made up of loans and equity Both of these are used to fund company operations The effect of converting investment capital into profit is shown by ROA The higher the ROA, the better because the company is making more money on less investment To assess the business performance of an enterprise, profit rate indicators (ROA, ROE) are often used, because it represents the relationship between profit and actual production costs, showcasing the business ability of people in using those factors According to Kaguri (2013), the appropriate scale is chosen to evaluate the business performance of an enterprise depending on the type of business For for-profit businesses, business performance is measured by financial indicators (Skandalis, 2005) Due to the aforementioned elements, our group will use ROA (Return to asset) as a suitable tool of evaluation of 243 Vietnam's corporation business performance in 2019 Therefore ROA will be presented as a dependent variable later in our model 1.2 Literature Review 1.2.1 Research into factors affecting business performance of enterprises For enterprises, business performance evaluation is indispensable as it helps them align their employees, resources, and systems to meet their strategic objectives As such, researchers have conducted various studies into factors affecting business performance of enterprises from both theoretical and empirical perspectives However, as those studies vary from different industries and contexts within different periods of time, the results can not be applied into Vietnam’s outlook and characteristics of Vietnamese enterprises – the scope of this thesis Following are the explanation and analysis of previous studies into the subject a) Prior research in foreign countries Firstly, “The Determinants of Small and Medium-sized Enterprises Performance in Nigeria” by Idris Isyaku Abdullahi, Sulaiman Chindo (2015) from which data was collected from National Bureau of Statistics of Nigeria and Central Bank of Nigeria database investigated five main factors that could be determinants of small and mediumsized enterprises, which are interest rate, government spending, net export, level of education and instability on SMEs performance in Nigeria SMEs performance was quantified based on share of SMEs contribution to GDP With ADRL approach, the research has identified that only two factors: interest rate and net export had significant and negative impact on SMEs performance Overall, the study pointed out some policies which are for regulators to improve the business performance in Nigeria Moreover, as the economic context of Nigeria is extremely different from that of Vietnam, the findings might not be applicable only in the Nigerian setting Secondly, to identify factors that are affecting business success of small and medium enterprises in Thailand, Chittithaworn, Islam and Keawchana et al conducted a research in 2011 with regression analysis Eight factors were examined during the research and these factors are SMEs characteristic, management and know-how, products and services, customer and market, the way of doing business and cooperation, resources and finance, strategy, and external environment Based on correlation analysis from 143 companies in Thailand, the results of the survey indicated that SMEs characteristics, customer and markets, the way of doing business, resources and finance, and external environment have significant positive effect on the business success of SMEs Whilst, management know-how, product and services and strategy have no significant effect on performance of business Several years later, another research also conducted in Thailand is the reflective study of Nimlaor, Trimetsoontorn and Fongsuwan in 2014 “Factors Affecting Business Performance: An Empirical Study in Thailand” which evaluated “the empirical relationships and influencing factors of firm strategy, firm environment and firm characteristics that influence the performance of the Thai garment industry” (Nimlaor, Trimetsoon and Fongsuwan, 2014) With PLS model and data collected from 178 chief executives in garment companies in Thailand, the research revealed that all firm characteristics including leaders and teamwork and firm strategy factor consisting of R&D, product differentiation and brand has direct influence on firm performance Firm environment also have indirect impact on performance of enterprises through subfactors such as government policy, alliance and international trading system Overall, the researchers in this study has showed that the internal factors of companies, espcially human-related factors also have statistical impact on business performance However, this research is limited in the Thai garment industry For that reason, the conclusion can be varying in other industries due to the unique characteristics of garment industry and therefore, unable to generalize those findings in other countries In comparison with the research of Chittithaworn, Islam and Keawchana et al., Nimlaor (2011), that of Trimetsoontorn and Fongsuwan (2014)also have similar variables in term of meaning, just only minor differences in categorizing variables and