PERFORMANCE OF THE VIETNAM LISTED REAL ESTATE SECTOR 2007 – 2012 In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In Finance By Mr: Truong Quang Long Trieu ID: MBA02039 International University - Vietnam National University HCMC September 2013 PERFORMANCE OF THE VIETNAM LISTED REAL ESTATE SECTOR 2007 - 2012 In Partial Fulfillment of the Requirements of the Degree of MASTER OF BUSINESS ADMINISTRATION In finance By Mr: Truong Quang Long Trieu ID: MBA02039 International University - Vietnam National University HCMC September 2013 Under the guidance and approval of the committee, and approved by all its members, this thesis has been accepted in partial fulfillment of the requirements for the degree. Approved: ----------------------------------------Chairperson ---------------------------------------Committee member ----------------------------------------Committee member ---------------------------------------Committee member ----------------------------------------Committee member ---------------------------------------Committee member Acknowledge To complete this thesis proposal, I have been benefited from the following people: Dr.Ho Diep, School of Business of the International University - Vietnam National University HCMC . I am particularly grateful for his valuable guidance and support. To all teachers, office staff of the International University - Vietnam National University HCMC and to all my friends with their kind support. Hochiminh City, September 2013 Plagiarism Statements I would like to declare that, apart from the acknowledged references, this thesis either does not use language, ideas, or other original material from anyone; or has not been previously submitted to any other educational and research programs or institutions. I fully understand that any writings in this thesis contradicted to the above statement will automatically lead to the rejection from the MBA program at the International University – Vietnam National University Hochiminh City. ii Copyright Statement This copy of the thesis has been supplied on condition that anyone who consults it is understood to recognize that its copyright rests with its author and that no quotation from the thesis proposal and no information derived from it may be published without the author’s prior consent. © Truong Quang Long Trieu/MBA02039/2013 iii Tables of Contents CHAPTER 1: Introduction ........................................................................................ 1 1.1. THE RATIONALE OF RESEARCH .......................................................................... 1 1.2. THE RESEARCH’S PURPOSE .................................................................................. 8 1.3. SIGNIFICANCE OF THE STUDY: ............................................................................. 9 1.4. THE RESEARCH OBJECTIVE AND THE SCOPE OF RESEARCH................................... 9 1.5. RESEARCH QUESTION .......................................................................................... 9 1.6. STRUCTURE OF THE THESIS ................................................................................. 9 CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODELS .......... 11 2.1. THE THEORETICAL CONCEPTS AND LITERATURES .............................................. 11 2.2. OVERALL BACKGROUND OF VIET NAM REAL ESTATE SECTOR .......................... 16 2.3. PRIOR STUDIES .................................................................................................. 24 2.4. THE RESEARCH MODELS AND THE HYPOTHESES ................................................ 26 CHAPTER 3: RESEARCH METHODOLOGY ................................................... 29 3.1. RESEARCH DESIGN ................................................................................................. 29 3.2. RESEARCH VARIABLES .................................................................................. 30 3.2.1 Dependence variables ............................................................................... 30 3.2.2 Independence variables.............................................................................. 33 3.2.2.1 Fixed assets ........................................................................................ 33 3.2.2.2 Capital structure: ............................................................................... 34 3.2.2.3. Enterprise Scale (Size):................................................................................... 35 3.2.2.4. Enterprise Age: ............................................................................................... 36 3.2.2.5. The Enterprise’s Position, Location ............................................................... 36 3.3. REGRESSION MODEL............................................................................................... 38 3.4. THE METHOD OF DATA COLLECTION ....................................................................... 39 3.5. THE METHOD OF DATA ANALYSIS:................................................................ 40 iv CHAPTER 4: DATA ANALYSIS AND FINDINGS ............................................. 41 4.1 DESCRIPTIVE STATISTICS .................................................................................. 41 4.1.1 Sample description of model 1 .................................................................. 42 4.1.1.1 Ratio of profit (EBITDA) on total assets ............................................ 42 4.1.1.2 The sample description of independent variables .............................. 44 4.1.1.3 Independent variables ........................................................................ 45 4.1.2. Sample description of model 2 ................................................................... 44 4.1.2.1. Index of market value TOBIN’S Q ..................................................... 44 4.1.2.2. Independent variables ...................................................................... 45 4.2 CORRELATIVE ANALYSIS ................................................................................... 46 4.3 REGRESSION ANALYSIS AND HYPOTHESIS VERIFICATION .................................. 49 4.3.1 EBITDA Model (Model 1) ......................................................................... 49 4.3.2 TOBIN’S Q Model (Model 2) .................................................................... 56 4.3.3 The verification of statistical hypothesizes ................................................ 63 CHAPTER 5: THE CONCLUSION AND RECOMMENDATION ..................... 69 5.1. THE CONCLUSIONS ................................................................................................. 69 5.2. RECOMMENDATIONS .............................................................................................. 71 5.3. THE LIMITATION AND ORIENTATION FOR NEXT RESEARCHES ................................. 73 5.3.1. The research’s limitation ............................................................................ 73 5.3.2. Next orientation of research ....................................................................... 73 References ................................................................................................................ ..75 Appendices................................................................................................................. .79 v List of abbreviation CPI Consumer Price Index FEM Fixed Effect Model FDI Foreign Direct Investment GSO General Statistic Office HNX Hanoi Stock Exchange HOSE Hochiminh Stock Exchange L Location of firm (dummy variable) MPI Ministry of Planning and Investment OLS Ordinary Least Squares RE Real Estate REIT Real Estate Investment Trust REM Random Effect Model SBV State Bank of Vietnam Tan Tangibility VSIC Vietnam Standard Industrial Classification vi List of Tables TABLE 1.1 FDI INTO VIETNAM FROM YEAR 2009 TO 2013F ........................... 2 TABLE 4.1. DESCRIPTIVE STATISTICS OF VARIABLES IN THE MODEL 1 FOR WHOLE RESEARCH SAMPLES. ............................................. 43 TABLE 4.2. DESCRIPTIVE STATISTICS OF RATIO OF PROFIT ON TOTAL ASSETS ACCORDING TO GEOGRAPHICAL ZONE. ....................... 43 TABLE 4.3 ABOUT DESCRIPTIVE STATISTICS OF VARIABLES IN THE MODEL 2 FOR WHOLE RESEARCH SAMPLES. ................................................................................ 45 TABLE 4.4. TOBIN’S Q DESCRIPTIVE STATISTICS ACCORDING TO GEOGRAPHICAL ZONE. 45 TABLE 4.5. CORRELATIVE MATRIX OF RESEARCH VARIABLES IN THE MODEL 1. ............. 47 TABLE 4.6. CORRELATIVE MATRIX OF RESEARCH VARIABLES IN THE MODEL 2. ............. 47 TABLE 4.9. REGRESSION RESULT OF POOLED METHOD IN THE MODEL 1. ........................ 52 TABLE 4.10. REGRESSION RESULT OF FEM IN THE MODEL 1. .......................................... 53 TABLE 4.11. REDUNDANT FIXED EFFECT TESTING RESULT OF THE MODEL 1. ................. 53 TABLE 4.12. REGRESSION RESULT OF REM IN THE MODEL 1. .......................................... 54 TABLE 4.13. HAUSMAN TESTING RESULT OF THE MODEL 1. ........................................... 55 TABLE 4.14. DESCRIPTIVE STATISTICS OF VARIABLES (NOT INCLUDE DUMMY VARIABLES) IN THE MODEL 2 FOR WHOLE RESEARCH SAMPLES.................................... 56 TABLE 4.16. REGRESSION RESULT OF POOLED METHOD IN THE MODEL 2. ...................... 58 TABLE 4.17. REGRESSION RESULT OF FEM IN THE MODEL 2. .......................................... 59 TABLE 4.18. REDUNDANT FIXED EFFECT TESTING RESULT OF THE MODEL 2. ................ 59 TABLE 4.19. REGRESSION RESULT OF REM IN THE MODEL 2. ....................................... 60 TABLE 4.20. HAUSMAN TESTING RESULT OF THE MODEL 2. .......................................... 61 vii List of Figures Figure 2. 1. Overall Organizational Performance as a Second-Order Construct 14 Figure 2. 2. Structural Representation of the Financial Performance Construct . 14 Figure 3. 1. The steps of research procedure ....................................................... 29 viii Abstract This thesis analyze the performance of Vietnam listed real estate sector through examine the impact of chosen factors on performance measures. The research use an unbalanced panel of 61 listed real estate enterprises on both Hochiminh Stock Exchange and Hanoi Stock Exchange over the period of 06 years from year 2007 to 2012 with 339 observations. Research follows study of Klauss Hammer and Yinghong Chen (2004) about Performance of the Swedish real estate sector market with applying in conditions of Vietnam. A panel regression model is set up on the basis of many prior studies, extended and improving and adapting the research requirement and condition by adding a variable Tobin’s Q which is market index of corporate performance. The research found clear evidence that the different real estate enterprises has different performances, the difference was not due to regional differences but are due to the impact of the capital structure (negatively) , enterprise’s age (negatively) as well as a portion of the impact of enterprise’s turnover (positively), etc. The results are also shown that Vietnam listed real estate firm have the proportion of fixed assets on total assets (tangibility) at low level and tangibility isn’t impact on firm performance. This thing should be noted due to a one of factors which Vietnam’s Banks consider when lending that are fixed assets. The findings can offer hints for improving performance of Vietnam real estate firm. Keywords: performance, real estate, panel data ix x Performance of the Vietnam listed real estate sector 2007 – 2012 CHAPTER 1: INTRODUCTION This chapter presents the reasons lead to the subject of the research, the necessity of the research, discloses the purposes and goals of the research, identify research objectives and scope as well as practical implications that research can achieve, at last presenting the layout of the thesis. 1.1. The rationale of research Real estate (RE) market has an important role in the economy and it directly impacts on various markets such as financial and monetary market, the construction market, building materials market and the labor market, etc. RE market is linked to a huge amount of assets in terms of scale, nature and value. In the world, RE market is one of the important markets of the economy. The proportion of RE on the total value of national assets is different depend on each countries, but usually accounting for around 40% of the total value of national assets of each country. The activities related RE field accounted for 30% total activities of their economy. The development of the real estate market has important implications for the economy, creating driving force to perform building infrastructure of the country. For illustrative, we have some facts and figures of the USA real estate market as follow: “Real estate generates nearly one-third of U.S. gross domestic product (GDP), creates jobs for nearly 9 million Americans, and is the source of nearly 70 percent of local government revenues. The total contribution of the housing sector alone approaches 20 percent of GDP. Real estate construction, construction permit activity, and real estate sales figures are closely watched by investors on Wall Street because of the effect real estate has on the nation’s economy. Real estate also represents a significant share of our accumulated national wealth. The total value of owneroccupied housing and investible commercial real estate in the United States is 1 Performance of the Vietnam listed real estate sector 2007 – 2012 estimated to be $26 trillion. Approximately $19 trillion of this represents the value of owner-occupied housing. Housing alone represents approximately 27 percent of U.S. household wealth and is the single largest asset category of households”. (Real Estate Principles: A Value Approach, 3/e, David C. Ling, 2010, p.15-16). Vietnam does not collect as much statistics as the US, but we can refer to some facts and figures from foreign direct investment (FDI) into Vietnam through the years (see Table 1.1 below). According to Report of real estate market 2012 from Phuong Nam Securities Corporation, FDI inflows into Vietnam continuous increasing capital is poured into the real estate market and accounts for a high proportion of FDI. This indicates that Real Estate Market Vietnam very attractive to foreign investors. This is one of the main sources of capital contributing to supports the growth of real estate sector. In 2012, FDI reached $ 13 billion, of which investment in real estate sector accounted for 14.2% of total capital investment reached U.S. $ 1.8 billion, ranking second after FDI investment in the processing - manufacturing industry. 2009 2010 2011 2012 2013f RE FDI (reg.) $7.6bn $6.8bn $845.6mn $1.85bn - FDI (reg.) $22.6bn $18.6bn $14.7bn $13bn $13-14bn FDI (impl.) $10bn $11bn $11bn $10.46bn $10.5-11bn Source: Historical data GSO, SBV, SJC, MPI, ANZ, HSBC, JP MORGAN (According to Report 2013 of CBRE Vietnam) Table 1.1 FDI into Vietnam from year 2009 to 2013F In Vietnam, real estate companies are accounting for a majority of fastest growth rate enterprise on TOP 500 fastest growing enterprises in Vietnam for period 2011, with the average growth rate: 10%-60% (according to Ranking Report of FAST 500 2012). The RE industry is growing strongly to meet the larger demand for building housing and physical infrastructure in period of modernization and 2 Performance of the Vietnam listed real estate sector 2007 – 2012 industrialization of the country. However, the rapid development of real estate sector in the context of its causes is the real estate market boom as government policies to boost the real estate and economic development of Vietnam received inflows of foreign direct investment poured into. This development also has its own imperfection. So we need to look at the development process of the real estate market in Vietnam. Formed after 1990, the Viet Nam RE market has experienced three times of booming and declining (1993-1999; 2001-2006; 2007 up to now). Although the characteristics of each period is different, but in general, the same thing in each period is the formation speculative growth which lead the market to inflated prices and when the bubble burst the RE market declining and/or become frozen, leading to the collapse of a lot of the real estate companies. In all three periods, the RE market downturn on condition of shortage of liquidity and the imbalance of supply-demand structure in term of quantity and structure. Vietnam's real estate industry is too immature, needs a lot of investments, need to draw on experience to develop. In particular, Vietnam RE sector needs to orient the development in the specific conditions of Vietnam to develop toward the right approach and appropriate way. The Vietnam RE market is developing and is forecast to strongly developing in future under many factors, such as: Economic Development: Economic development of a country inevitably increase the demand for land use in the manufacturing sector, the demand for office space, business center ... Moreover, with economic development, income of people will increase and thereby increasing the demand for housing. 3 Performance of the Vietnam listed real estate sector 2007 – 2012 Population: population growth also means increased demand for goods in the market, to meet for the industry expand, the development of scale which in turn increased the demand for land use. FDI capital: FDI capital into Vietnam constantly increasing, in which capital flows into real estate market produce relatively high proportion. This demonstrates that the Vietnamese real estate market very attractive to investors abroad. Law: Law can be considered as important factors affecting the formation and development of the RE market. Economic, finance and currency policy of the Government: Economic Policy of the Central Government and the Local Authorities are also sensitive factors affecting the real estate market. Urbanization: Vietnam is in transition from an agricultural-based economy to a manufacturing-based economy causing a constant migration from the countryside to cities. According to the Vietnam Urbanization Review by the World Bank, Vietnam is urbanizing at a rate of 3.4% per year. At present, on Vietnam’s stock exchange the real estate market has sixty one real estate joint stock companies with forty one companies listed on HOSE and twenty companies listed on HNX with the first trading day from 2006 to now (according to website: www.cophieu68.com). Although, economic experts predict the real estate market are not optimist, it is facing the major problems of lack of capital, fluctuations in the market, human management along with weak macroeconomic, limitation in legal frame etc, it still has high profit. People have high demand on this sector, Vietnam’s population is increasing though land is limited, real estate is still the potential business. Looking at the income statement of several real estate companies, few have positive profit, however; most have losses. 4 Performance of the Vietnam listed real estate sector 2007 – 2012 In the current crisis, after a period of bubble growth, the real estate market went down and freeze. In which, the total value of the REs inventory is about 111,963 billion VND (due to 2012 Real Estate Market Report - the Ministry of Construction). Specifically, the warning sign is the high real estate inventory: Housing, inventory 42,230 homes, Office space : 92,800 m2; Commercial center : 98,407 m2; Land : 7,922,485 m2; Commercial land : 1,951,033 m2. Along with that, there are 2,600 enterprises (include construction firm and real estate firm) has stopped or dissolved. Furthermore, outstanding-loans of real estate (to 31/10/2012) are 207,595 billion VND, up 3.6% (compared to 31/12/2011). Non-performing loans accounted for 6.5% of total real estate loans, but the vast majority of business real estate loans are unlikely to pay when due from unsold products. (synthesized from Reports of the State Bank of Vietnam). Attracted by the high and fast returns (super profit but temporarily), many companies have invested in the real estate market but not many firms have had success. Developers are facing difficulties in carrying out projects. Why succeed? Why fail? In a competitive and difficult business environment as well as the RE sector, there are a lot of opportunity to develop but also there are many risks. Normally, enterprise must examine the performance to recognize factors affect to its performance and to have correcting policy. And this process is especially significant in Vietnam, during a period in crisis. Through 20 years of development, the Vietnam real estate market has undergone three times of boom and bust. The volatility of the real estate market is generally associated with macroeconomic policies and events in the economy. The failure of the real estate firms in business partly reflects the professionalism of the real estate firms in Vietnam is still low. Many real estate firms race to investment in the 5 Performance of the Vietnam listed real estate sector 2007 – 2012 project while the schedule of RE project is very complex and required enormous resources, especially money. Government's focus is on solutions mainly to curb inflation, stabilize the macro-economy and ensure social security, issued guidelines "implemented tight monetary policy " (11/NQ-CP Resolution dated 24/2/2011). In the process of implementing, this policy has also caused a statement in which the capital thirsty of economy has pushed many firms into difficult situations. In March 2011, The State Bank of Vietnam (SBV) has taken a series of measures to control interest rate ceilings on deposits in Vietnam Dong (VND). On April 2012 the inflation is just reduced, together with applicable interest rate ceiling, the SBV has taken measures towards cash flow to the manufacturing sector, limits the credit on the non-manufacturing sector (including the real estate sector), while interest rates could be adjusted for different objectives at a high level. In 2011, outstanding interest rate is 18.3%/ year on average. In 2012, the SBV has significantly reduced operating rates, with 5 interest rate reduction from 14% to 8%. With that interest rate policy the consumer price index (CPI) was controlled, the CPI increased by only 6.81% in 2012 vs. 12/2011 and increased 9.21% over the 12 month average in 2011. However, the downside of tight monetary policy is many companies do not have access to bank credit funds. There were many barriers to firms in accessing bank loans. The first and largest is the high interest rates 78.5% of firms had to pay interest rates of 16% or more; more than half of the firms have to pay interest rates of 18% or more. In addition, controlling the ratio of loans to nonproduction areas should not exceed 16% of total loans by tight monetary policy of the SBV to direct capital flows into the production region directly is essential, but also affect the project investment priorities as social housing segment, housing relocation, housing for low-income people in the first half of 2012. Late 2012, early 2013, higher 6 Performance of the Vietnam listed real estate sector 2007 – 2012 interest costs pushed higher capital firms, leading to efficient of business operations decline. Meanwhile, the business situation of enterprises is difficult, market output shrinking, increased inventory, efficiency of most companies at very low levels. Number of enterprises that went bankrupt and/or closed skyrocketed. In 2011, about 53,000 firms, firms 2012 is approximately 58,000 (source: GSO). The insolvency status of the firms has led to appropriated funds worsening, increasing bank loans. The capital structure of the Vietnam enterprise became very risky. As reported at the 2012 Conference by Bridge Investments Magazine held on 08/16/2012, in the Ho Chi Minh city, the payable rate on the equity Q II/2012 average of 647 non-financial companies listed, up to 1.53 times, the construction industry and real estate liabilities total more than 2 times equity (207%) and the lowest consumer goods industry with 80%. This leads to non-performing loans and bad loans of commercial banks to increase. Bad debt is the underlying cause that congests flow of capital in economy, cash flow not in rotation makes it a difficult situation. In that situation, the real estate enterprises need to have many solutions to attract capital from social and improve the skill of business and management. After the success and failures of RE market also as RE firms, the requirements of examining RE firm’s performance is essential from both microeconomic and macroeconomic points of view. From the firm’s perspective, it is an issue of existing and increasing business performance in an increasingly difficult environment. From the economic perspective, it is the stability and development of real estate market – an important market of the economic. The real estate industry have an important role in the economy but there have not been many studies on RE firm’s performance done in Vietnam, only a few macroeconomic study have been performed. In order to evaluate the performance of 7 Performance of the Vietnam listed real estate sector 2007 – 2012 Vietnam RE sector among the hot stage of developing Vietnam’s economy, it is essential to conduct a formal analysis. This study attempts to provide empirical evidence on the performance changes of Vietnam RE sector arising from economic crisis over the past six years. So, we think further study of real estate firm’s performance to examine the RE industry in period of before and during crisis and on how this relates to main factors. Aim to find out the evidence of its affect on performance of RE firms. Using the panel data regression (unbalance panel data) investigates the performance of all listed RE companies. (up to now, there are 61 listed companies which to analyze the profitability). Therefore, I want to conduct study on the performance of real estate firms, the topic as “Performance of the Vietnam Listed Real Estate Sector ". In order to help enterprises have a proper view of management, quantify the impact of main factors to provide a basis for the appropriate improvements. Through that, improve and upgrade real estate companies more and more powerful and effective developing real estate market as well. 1.2. The research’s purpose The study aim to solving issues arises as follow: To investigate and study of the performance of the Vietnam listed real estate firm (follow the approach of Klaus Hammer and Yinghong Chen, 2004). To analyze and assess the impact of the main factors on the performance of the Vietnam listed real estate firm. Through these goals in order to improve the performance of Vietnam listed real estate firms. 8 Performance of the Vietnam listed real estate sector 2007 – 2012 1.3. Significance of the study: The performance of the real estate sector in one country not only concerns the creditors, investors, policy makers and tax authorities in that country, but also their counterparts in other closely related countries. The study would provide insights in structure of profitability of real estate companies. 1.4. The research objective and the scope of research The research objective is Vietnam listed real estate firms that is operating on the real estate market of Vietnam, including 61 real estate joint stock companies with 41 companies listed on HOSE and 20 companies listed on HNX with the first trading day from 2006 to now. This study is using similar approach with Klaus Hammer and Yinghong Chen (2004) with considering specific characteristics of Vietnam economy. Applying Ordinary Least Squares (OLS) to examine the performance of Vietnam listed real estate sector. 1.5. Research question 1. How are performances of Vietnam listed real estate sector over last 6 years through performance measurement by Tobin’s Q (market’s view) and by ROA (enterprise’s perspective)? 2. Following by Klaus Hammer and Yinghong Chen approach, what is the status of performance determinants of the Vietnam listed real estate sector? 3. What is a solution to improve performance of Vietnam listed real estate firms according to this research result? 1.6. Structure of the thesis To achieve the research objectives we proposed, the thesis is organized in the layout which consists of 5 chapters and specific contents are as follows: 9 Performance of the Vietnam listed real estate sector 2007 – 2012 Chapter 1: Introduction Chapter 1 presents the reasons lead to the subject of the research, the necessity of the research, discloses the purposes and goals of the research, identify research objectives and scope as well as practical implications that research can achieve, after that to present the layout of the thesis. Chapter 2: Literature Review This chapter reviews theoretical concepts, literatures related to firm performance, followed by summarises and discusses the prior researches related to the research title, presents the overall background of Viet Nam real estate market, after that established research models and research hypotheses. Chapter 3: Research Methodology This chapter presents the procedure of research implementation, definition and measurement for research variables, building regression model. Next, present the basis of choosing research object, data source, and method and used to analyze research data. Chapter 4: Data Analysis and Findings This chapter presents the results of analysis and explains those results. The analyses include descriptive statistics, correlative analysis, and recurrent analysis of table data to verify research hypothesizes. Chapter 5: Conclusions and Recommendations This chapter presents collected conclusions and research results, brings some orientations of improving the effectiveness, output for real estate enterprise. The chapter’s final part will present last limitations and orient next researches. 10 Performance of the Vietnam listed real estate sector 2007 – 2012 CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODELS This chapter reviews theoretical concepts, literatures related to firm performance, followed by summary and discusses the prior researches related to the research title, after that established research models and research hypotheses. 2.1. The theoretical concepts and literatures Theories of firm performance There are several concepts related to firm performance. According to the open encyclopedia Wikipedia, in economic point of view the term of performance refers to the using of resources so as to maximize the production of goods and services. An economic system is said to be more efficient than another (in relative terms) if it can provide more goods and services for society without using more resources”. And, “In absolute terms, a situation can be called economically efficient if: • No one can be made better off without making someone else worse off (commonly referred to as Pareto efficiency). • No additional output can be obtained without increasing the amount of inputs. • Production proceeds at the lowest possible per-unit cost. In these definitions of efficiency, the main idea is that “a system is efficient if nothing more can be achieved given the resources available”. These definitions are general meaningful, in practice we need more specific definitions. In accounting, the business performance relate to the concept of Profit: “profit is the difference between the purchase and the component costs of delivered goods and/or services and any operating or other expenses” (Wikipedia). There are several kinds of profit measures: Gross profit = sales revenue – cost of goods sold (COGS); Net profit = gross profit – expenses. 11 Performance of the Vietnam listed real estate sector 2007 – 2012 In comparing companies of different sizes, we use finance ratio. The performance can be measure by profitability ratio. It reflects the efficient of resources usage or reflects the corporate governance performance. Profitability ratio measure how efficiently a firm uses its assets and manages its operation (the book of Fundamentals of Corporate finance). Profit margin = Net income / Sales Return on Assets (ROA) = Net income / Total assets Return on Equity (ROE) = Net income / Total equity Through using of profitability ratio, it can capture the actual situation of performance of the enterprise. Firm performance measurement According to the theory of organization and strategic management (Murphy et al, 1996), accurate and appropriate performance measurement is critical to understanding corporate success and failure. As organizational performance can be judged by many different aspects, resulting in many different interpretations of “successful performance”, organizational performance should be examined from a single constituency perspective, that of the common stockholder in for-profit organizations (Carton and Hofer, 2004). From this perspective, successful organizational performance can be equated with successful value creation for stockholders, this perspective typically equates value creation with organizational financial performance; that’s mean the organizational financial performance. According to Carton and Hofer (2006) reviewed the empirical studies published, most of studies used performance as a dependent variable. The authors identified 88 different measures to measure performance. 46% of these 138 articles used only one measure to measure performance, 25% used two measures and the 29% remaining 12 Performance of the Vietnam listed real estate sector 2007 – 2012 ones more than two measures. The profitability measures appeared in 70% of the articles. Then came the growth measures and in third the market-based measures. This review revealed that the performance concept has multiple dimensions. Therefore performance has to be analyzed using a set of measures. Venkatraman and Ramanujam (1987) showed that the performance concept has at least two different dimensions: growth and profitability. Each of these dimensions may be described by one or more measures. Profitability, for example, may be described by measures such as: return on equity, return on sales, return on assets, and sales growth, Elizabeth Krauter and Almir Ferreira de Sousa, 2009. Performance is measured in terms of financial and organizational perspective. Financial performance as maximize profit, maximize return on assets, and maximize shareholder interests is the core issue of the effectiveness of the business. For a broad definition of performance, organizational performance is measured by revenue growth and market share. There are different ways to measure firm performance and lead to different results of measurement. The performance measured by ROA and ROE, return on investment ROI is often used. The accounting performance measurement represents the financial ratios derived from the balance sheet and income statement has been used in many studies (Demsetz and Lehn, 1985; Gorton and Rosen, 1995). In addition, there are performance measurement is called measuring market performance as the price per share over earnings per share and the index of Tobin's Q (Ross/Westerfield/Jordan, Fundamentals of Corporate Finance, 2010). The choice of how to measure the performance of the company may affect the measurement results: if the stock market is not effective, measuring performance by market value will not 13 Performance of the Vietnam listed real estate sector 2007 – 2012 give good results. According to Carton and Hofer, 2004, overall organizational performance has an unobservable second-order, hierarchical construct. Figure 2. 1 Overall Organizational Performance as a Second-Order Construct Figure 2. 2 Structural Representation of the Financial Performance Construct Justification for selections Consideration of several critical control variables such as leverage, size, age of the firm on the firm performance. 14 Performance of the Vietnam listed real estate sector 2007 – 2012 The effect of leverage on firm performance Leverage refers to the use of outside resources (loans) instead of own equity. Measuring leverage is a way to determine the probability of business insolvency. Using debt replace for equity because interest rates pay for debt to be free tax, while dividends or other forms will be taxed. In principle, if we use debt instead of equity would reduce the tax payable, increase the efficiency. At the same time the cost of using debt is cheaper than equity, thereby increasing the debt will reduce the cost of capital and increase business efficiency. However, this ratio can not rise up too high because the enterprise will fall into unhealthy financial situation, increase the risk of insolvency. Research of Ratha (2003), Zeitun and Tian (2007) has pointed out leverage have negative impact on the efficiency of enterprises. So I have put leverage as a control variable that impact on firm performance. The effect of size on firm performance The size of the enterprise can be measured by the logarithm of assets or revenues. In this research I choose factor of revenues because variable of total assets was included in other variables as well as the revenue variable is suitable for measuring the size of the service sector. Revenue have high value and very different due to each enterprise so to ensure achieve normal distribution of variable, variable will be converted to digital format to follow normal distribution that is taking the log of revenue. Because variable of total assets was included in other variables as well as the revenue variable is suitable for measuring the size of the service sector. Revenue have high value and very different due to each enterprise so to ensure achieve normal distribution of variable, variable will be converted to digital format to follow normal distribution that is taking the log of revenue. 15 Performance of the Vietnam listed real estate sector 2007 – 2012 Different size of enterprises leads to factors that affect it differently. Large enterprises will have the advantage of size, research of Titman & Wessels (1988) found that large enterprises will easily penetrate the market and borrow at better conditions than small enterprises. Short and Keasey (1999) suggests that large-size enterprises have greater financial capacity to generate internal funds than smaller enterprises, these enterprises can avoid the financial constraints and more funding for beneficial projects to increase the efficiency of business operations. Research of Zeitun and Tian (2007) have shown that the firm size have the positive impact on firm performance. Therefore, I have put the firm size as a control variable that impact on firm performance in this study. The effect of age on firm performance The enterprise is also affected by age of firm. Based on the business life cycle, the young firm has a large degree of uncertainty in the first years, whereas old firm has greater degree of stability, so the firm efficiency to be increased. On the other hand, according to Ang et al (2000), the longtime firm will achieve greater efficiency by reducing the cost compared to start-up enterprises. Thus, the age of the enterprise impacts on firm performance. So this research will take age of firm to do as control variables affect the firm performance. 2.2. Overall background of Viet Nam real estate sector At the beginning of 2011, Vietnam was ranked no. 4 on the attractiveness of investment in the emerging real estate markets. At first glance, this makes foreign investment inflows into the real estate market increase in the near-future. However, there are potential risks on the business in Vietnam. The market is lack of information, capital, good land location, and inadequate legal framework. Investor will have to solve many problems before construction is 16 Performance of the Vietnam listed real estate sector 2007 – 2012 complete. This will cause investors to carefully consider before deciding to invest. It can be said, Vietnam's ranking will help attract more attention from both international and local investors, but this will not necessarily impact directly and strongly to investment in real estate Vietnam's real future. In the two-year period 2006 - 2007, the real estate was considered an effective investment channel because there were a lot of fluctuations, increasing in price while loan interests were low. There are a lot of investors and developers without careful consideration of the market demand causing a property bubble. From 2008 until now, due to financial crisis in 2008, the economy fell into unsustainable status, rising inflation, the government must intervene by limiting money supply, using tight monetary policy that make market falls in to difficult from 2009. Most of banks’ budget was reduced lead to negative effects to real estate market. This was one of reasons why the real estate market was frozen. Many economic experts have identified that the real estate industry may be difficult to grow in the next few years because it must face with major problems like lack of capital, fluctuations in the market, human management along with weak macroeconomic, limitation in legal frame, large inventries of unsold properties, etc,. The serenity of the real estate market in 2013 Real estate market is fairly quiet after a time of slipping drastically. The market is witnessing a decline in many segments. There were many factors affecting the market through illustrative development of market in recent time. The Government has issued Resolution limiting non-production line of credit of commercial banks at 22%/year (2011), and at 16%/year (from 2012 to now). Both banks and investors are facing many difficulties in capital mobilization and disbursement. The credit tightening, and this add up to with the many disturbing 17 Performance of the Vietnam listed real estate sector 2007 – 2012 indicators of the economy has made the real estate market becomes scarce of capital, many real estate projects stalled or delayed, as one of many factors which made property prices drop explicitly in many areas and segments, while the average percentage of sales also decreased. Specifically, the high inflation rate, resulting in increased construction costs and reduce real income of the investor. Otherwise, in Vietnam, most of transaction of house is done by gold. Gold prices increase while restrictions of trading affect one of the main sources for buying and selling real estate. The legal framework is still incomplete and more difficult to anticipate changes led to many businesses face greater risks during procees of execute project (projects suddenly becomes ineffective and unachievable). Under the impetus of super profits in the first period of development and abundant capital from banks as well as FDI capital, the investments and project developers conducted massive investment in real estate projects. While the financial resources of the majority of population are still weak, people who have the ability to buy a home are less so the resulting mismatch of supply and demand. Now, the inventory of real estate market are very large (over 2 million billion VND), it is necessary to solve inventory to clearance bad debt for society. Real estate market is in the quiet phase in several segments, including the trade center segment. There are a lot of unsold apartment. The high-end segment has a massive inventory while the new policies of government relate to affordable housing and it still in a difficult situation that need improve. The government has measures aim to revive the real estate market but have not been able to help the market recover because market laws determine growth or decline and not the government’s desire. The market slump but nobody can help investors. Property project developers depend on funds obtained from buyers. 18 Performance of the Vietnam listed real estate sector 2007 – 2012 About of supply issue, commodity structure of real estate market is still inadequate. The markets is lacking of commodity in term of scale and price that match most people's needs - even though prices have fallen, many types of real estate is not in reach for most buyers. Many investors have commented that service prices are too high this lead to a conflict with home/land buyers. Apartment segment has the strongest decline, the apartment market facing saturation and oversupply in the near future. From 2012 until the present (2013), the housing market have reduce, the rate decreased from 3-5 million VND/m2 in some areas compared to the beginning of 2013. Apartment market also has a similar of scenarios, price increases at the beginning of the year but then slowed down at the end of 2012. Consecutively in 2011, 2012, 2013 tens of thousands of new apartments launched each year, continue to exert pressure on prices. In terms of supply-demand relationship, the market remains flat, sometimes even the supply has not kept pace with population growth. However, in reality, in terms of prices, the market is in surplus again because the price is too high compared to the solvency of the people. A nice consequence that the market is going down to professionalize, and buyers have more choices. Especially high-end housing segment is under the great pressure, to give up one's seat to housing segment of average and ordinary rates that potentially develop stronger, more suitable for the majority of people. Now who have real demand is going to find an investor with actual reputable. The office segment continues bleak with changing in type of tenants, requiring the landlord must have the appropriate business strategy to find customers. Late 2011 and early 2012, for the first time, grade A office segment had more positive business results than grade B segment. However, this degree of improvement 19 Performance of the Vietnam listed real estate sector 2007 – 2012 is not large enough to show a really flourishes industry. The company needs small space tends to shift more of the premium segment to cheaper segment. However, it appear a number of companies, especially large corporations have needs of hire huge area in the building grade A. Currently most of the rents from the firms need smaller office area 250m2. However, some companies hire large area trying to take advantage of reduced rents and tenants are emerging, especially from the banking, insurance or education. The tenants and investors are actively looking for sites and therefore, the building owner will probably get more than the required of area over 500m2. Tenants have more choices and more bargaining rights, thus requiring the investor have to map out marketing strategies and selling wisely to strengthen competition. The stimulus tactics such as building steps rent, free rent for the finish stage, financing costs of complete stage, discounts or free parking and/or the right to place signs panel, etc. Especially for the new building, the investor can create competitive advantage by focusing on quality, creating attractive working environment in the office, such as equipment, designs, green space. Also the trends of selling at costs are expected to continue in term of strategies of attract customers and reduce financial pressure on all investors from banks, particularly with the building with large floor. Features of the property market Vietnam. Compared with the developed countries and other countries in Southeast Asia, the real estate market in Vietnam still less developed. Many investors lack of capital, experience, knowledge, competence, especially strategic vision and business strategy. In the context of the real estate market began to plunge from 2009 and have been in crisis up until the present time, the gaps of knowledge were gradually revealed. The real estate businessman realized that to succeed they must have the knowledge and 20 Performance of the Vietnam listed real estate sector 2007 – 2012 expertise, not just street knowledge. Knowledge is required for each person from the real estate brokers to manager in real estate majors. Although land dwindles, many houses of projects remained uninhabited for speculation. The legal framework is weak and incomplete, failing to protect the interests of buyers. Another problem is the lack of information on urban planning and project information. This put people who have real needs in doubt and create opportunities for speculators. In Viet Nam, there exists the situation of bad debt, which is different with other countries. The investors, the property project developers is funding by prepaid money obtained from buyers. The frozen as well as the difficult of real estate market in recent years has shown that when the projects are unmarketable will make more impact on the society. The buyers cannot get their houses when the market is frozen because of the developers don’t have the funds to complete their projects and they can’t get back their money either. Market prospects in the near future In 2015 Vietnam will wholly joined the WTO, then will create an equal playground for many foreign investors in Vietnam, including companies, corporations, which are powerful and professional. And we also expect that after this "volatile period", Vietnam property market will be restored because it have the rules. The demand for human resources, the population mechanics growth in the big cities, the demand for housing will grow continuously in the future. Overall, when the market capital flow is not circulating and the economy has not improved it is hard to be optimistic about the real estate market. Market situation 21 Performance of the Vietnam listed real estate sector 2007 – 2012 can only be positive if the most positive change in policy contributed to the impetus for the market. The demand for housing remains high due to the urbanization process, so that the real estate market will continue to grow in the future, albeit at a moderate level. Customers will become more knowledgeable and "wise" and the market will move to a higher stage of development. The real estate business will vary depending on the segment and the product with affordable cost will be more successful. On the other hand, customers will also enjoy the many promotional policies and better conditions of contract and the visionary developers will have more chance of success. In this current context, the Vietnam real estate market is heading for a new solution that can help market overcome difficult and develop again. It’s a REIT which been assess to have significant effect to RE market. Real Estate Investment Trust (REIT), it relates to a method of real estate investing for numerous people through the widespread distribution of certificates of real estate investment funds. REIT appeared in the early '60s in the United States of American, so far have had in over 20 countries in the Americas, Europe, Asia ... has rules for its operation. In Vietnam, no REIT legislation yet but there are some legal form of it. One of which is the CII, the Company of Invested Infrastructure which was established through the issuance of shares. After more than 40 years since its inception, REIT has shown that it is one of the driving forces of real estate development. REIT offers countless opportunities for small investors, people involved in the real estate market, create long-term investment capital, create capital channels and maintain capital for projects to help banks, funds release capital for investment projects. The market will have opportunities for funds 22 Performance of the Vietnam listed real estate sector 2007 – 2012 (REIT), involvement of Real Estate Investment Trusts will help to market more new funding channel. The property investment funds can buy apartments as their prices reduce. They buy apartments and rent them out. In market situation is shortage of apartments for lease, and etc. with more bad debts. From early 2013, the wave of companies, investment funds of Vietnam and foreigner to purchase a part or the whole of the real estate projects is growing strongly. Ministry of Finance has officially allows real estate investment trusts to be created and put into operation. The Viet Nam real estate market in the coming period is likely to witness boom investment from the real estate investment funds. The certificate of real estate investment trusts will be the focus of attention for both individual investors and organizations participating real estate market that is expected to grow again with the emergence of new modes of investment. According to Circular No. 228 of the Ministry of Finance on the funding, establishment, management and monitoring of investment real estate investment funds, real estate investment fund be organized and operated as a public securities investment funds (real estate investment funds) or public securities investment company (called investment company of real estate securities). Investment property fund is offered for sale to the public fund certificates and fund issuance to raise capital. Currently there exists many problems can cause difficult to fund activities such as regulation of the real estate condition that funds are allowed to invest in will make investments in real estate will be limited. Or, as the case as the property is in process of construction, the Fund can only invest in when it have contract with potential customers, ensuring property that can be sold or can be used or for hired 23 Performance of the Vietnam listed real estate sector 2007 – 2012 immediately after completion. This is very difficult, because cannot guarantee 100% that property can be sold or leased after the project is complete. 2.3. Prior studies Some studies have examined the performance of the real estate firms. Authors have investigated a variety of real estate market, such as Swedish – empirical study (Klaus Hammes and Yinghong Chen, 2004), European countries – empirical comparison study (Klaus Hammes and Yinghong Chen, 2005), in the close topic have the study of Thi Kim Nguyen related to developed markets, emerging markets and lesser emerging markets ( Thi Kim Nguyen, University of Western Sydney, 2009). Research of Klaus Hammes and Yinghong Chen, 2004 They conduct an empirical study “Performance of the Swedish Real Estate Sector 1998-2002”. They found that “Firm performance can be explained by capital structure, size, age, tangibility and other factors.” “The results indicate that banks and financial institutions lend more to profitable firms and firms with more tangible assets than otherwise. Tangible assets as ‘inventory’ contribute negatively to performance after taking into account the effect of capital structure on performance”. It was also concluded that “tangible assets, essentially the property owned by a company, contribute to the profitability of a firm up to a point as collateral for bank loans. Excessive tangible assets are negatively related to profitability, at least for the shorter term”. They run three different regressions for various measures of the return on assets in all cases controlling for the impact of capital structure changes and thus the risk level of the company. They use a random effects estimator for unbalanced panel as described in Baltagi and Chang (1994) and Baltagi (1995, pp 149). The estimator 24 Performance of the Vietnam listed real estate sector 2007 – 2012 allows them to include time- invariant dummy variables, sectorial and regional dummies. They estimate the following model: Profit=f(tangibility, debt ratio, size, age, industry, region) Klaus Hammes and Yinghong Chen, 2004, also conduct study for European. They examines “the performance of private property companies in 13 European countries: Austria, Belgium, Denmark, France, Finland, Germany, Greece, Netherlands, Norway, Portugal, Sweden, and the UK for the period of 1990 to 2003”. They saw that there are “large differences between the countries with the most profitable companies found in the Netherlands, Spain, Denmark, and the UK”. “Using a simultaneous equation framework to model the real estate sector with Profitability and capital structure as endogenous variables”. They find that “the elements that influence the profitability of the firm in one country are also largely relevant in the other countries but differ in the effect due to different economic conditions and business cycles in different countries”. “The economic crisis in the early 1990s left a clear mark for the countries suggesting the crisis was pan European. This indicates that business cycle is one important factor in the study of performance of the real estate sector. In addition, there can be potential portfolio gains by spreading the investment over the studied countries”. In conclusion, they find “a negative effect of borrowing on performance in most of the countries except Sweden, Greece (insignificant). Firm size firm has a weakly positive effect on performance in all countries except for Sweden where it is insignificant. Except for Austria (negative significant), Greece, and Portugal (insignificant), tangibility is related significantly positive to borrowing, but not to profitability”. The technique which Klaus Hammes and Yinghong Chen used is panel data regression as also known as simultaneous equation framework. Using “a panel of 781 25 Performance of the Vietnam listed real estate sector 2007 – 2012 firms to analyze the profitability of the Swedish real estate sector with regard to regional and sectorial aspects. Panel data regressions using single equation regressions are used to identify the relevant factors. However, a simultaneous equations framework is used to address the issue of the endogeneity and potential causality of the performance and capital structure determination”( Klaus Hammes and Yinghong Chen, 2004). The first important work, which they resolved is to determine measure firm performance. They think that “One possible measure to be used would be the return on sales or simply the profit margin” but “this measure lacks a link with either agency or governance influences, since this measure neglects the investment dimension presented in the agency literature”. Meanwhile, the ROE ratio also has several disadvantages, sometimes it can be easily manipulated by delaying expenses or capitalizing losses. Based on few previous studies, they have a basic for choosing ROA ratio as the appropriate measure. Thi Kim Nguyen (University of Western Sydney, 2009) also conducted study on performance of RE market with title “The significance and performance of listed property companies in developed and emerging markets in Asia”. She observed that Asia RE firms “reflecting a more significant potential role in investment activities” and “the sub-sector of the less emerging markets in Asia (e.g Vietnam) potentially providing enhanced property investment opportunities”. 2.4. The research models and the hypotheses Research models The thesis studies the performance of listed real estate sector. Based on theory and previous research, the following research model is proposed. H1: tangibility H 26 Performance of the Vietnam listed real estate sector 2007 – 2012 H2: debt ratio H H3: size H H4: age H H5: region H H = f(tangibility, debt ratio, size, age, region) Research hypotheses From the above research model and based on the previous research results, the research hypotheses have been constructed with expectations about the relationships as follow: For dependent variables EBITDA/ Total assets: Hypothesis H1: There exists relationship impact of the density of fixed property/ total assets to the enterprise’s operating effectiveness (EBITDA/ Total assets). Hypothesis H2: There exists relationship impact of the proportion of debt ratio on total property (capital structure) to the enterprise’s operating effectiveness (EBITDA/ Hypothesis H3: There exists relationship impact of enterprise scale to the enterprise’s operating effectiveness (EBITDA/ Total assets). Hypothesis H4: There exists relationship impact of enterprise age to the enterprise’s operating effectiveness (EBITDA/ Total assets) Hypothesis H5: There is not exist relationship impact of enterprise’s position, location to the enterprise’s operating effectiveness (EBITDA/ Total assets). For dependent variables Tobin’s Q: Hypothesis H6: There exists relationship impact of the density of fixed assets / total assets to the enterprise’s market index TOBIN’S Q. Hypothesis H7: There exists relationship impact of the proportion of debt ratio on total property (capital structure) to the enterprise’s market index TOBIN’S Q. 27 Performance of the Vietnam listed real estate sector 2007 – 2012 Hypothesis H8: There exists relationship impact of enterprise scale to the enterprise’s market index TOBIN’S Q. Hypothesis H9: There exists relationship impact of enterprise age to the enterprise’s market index TOBIN’S Q. Hypothesis H10: There is not exist relationship impact of enterprise’s position, location to the enterprise’s market index TOBIN’S Q. 28 Performance of the Vietnam listed real estate sector 2007 – 2012 CHAPTER 3: RESEARCH METHODOLOGY This chapter presents the procedure of research implementation, definition and measurement for research variables, building regression model. Next, present the basis of choosing research object, data source, and method and used to analyze research data. 3.1. Research design The research was implemented by building and applying the quantitative model. The research was conducted by choosing, filtering real estate enterprise for the enterprises that express clearly the characteristics of real estate business department to get research samples highest homogeneity. Due to the limitation of data source, we will use the financial data of real estate enterprises listed on HCMC and Hanoi stock markets. The data were extracted from yearly auditing financial report of listed real estate enterprises from 2006 to 2012. After calculating and classifying the data we will be used statistical analysis software, EVIEWS 6, to building research model and verify statistical hypothesizes which the research proposed. Research procedure was described by the following model: Definition of research problem Theoretical research Establishment of research model Data collection Data analysis Conclusion Figure 3. 1. The steps of research procedure 29 Performance of the Vietnam listed real estate sector 2007 – 2012 3.2. Research variables The research belongs to the kind of research for cause and effect relationship. The concepts will be defined representative research variables. Research variables will be defined. From that, define the values, change of variables to proceed building and verifying the hypothesizes about the relationship between the concepts. Research target is to explain the upheaval of related dependence variable to the upheaval of independent variables. Listing real estate enterprise’s operating effectiveness research topic will proceed experimenting, verifying the effect of major factors to business operating effectiveness of posting real estate enterprise. The following variables are considered to use the model of research. 3.2.1 Dependence variables This topic studies about business operating effectiveness of real estate enterprise. Therefore, dependence variables will be the enterprise’s business operating effectiveness variables. About the concept, the enterprise’s operating effectiveness according to Daft (2007) is using resources in the enterprise effectively to achieve business target. There are many ways of effective measurement like using the ways of accounting measurement such as effective indexes (ROI, ROS, ROE, ROA…) or the way of measurement based on market index like Tobin’s Q. According to Klaus Hammer and Yinghong Chen (2004), in the research of operating effectiveness of Sweden real estate area, the authors proposed to measure operating effectiveness by many ways of measurement effectively like using ROA and TOBIN’SQ. ROS didn’t reflect the relationship between the profit and influencing effect of managing effectiveness as well as investment, Majumdar and Chipper (1999), ROE reflected the 30 Performance of the Vietnam listed real estate sector 2007 – 2012 relationship between the effectiveness and using the capital, however its exactness (Financial Management – Dinh The Hien, page 75-76), (Ross/Westerfield/Jordan, Fundamentals of Corporate Finance, 2010) must sometimes be considered because it can be adjusted easily by making slowly the expense of enumeration or capital loss (according to Klaus Hammer and Yinghong Chen, 2004). Hence, to express the enterprise’s business effectiveness, ROA is considered as a suitable index, according to Gleason et al (2000), Hammes (2003), Saedi and Mahmoodi (2011), Abul (2012), Rajan and Zongales (1995). ROA expresses a profitable level from the enterprise’s business property. Net profit on total property, the measurement of profitable ability on company property are expressed the correlation between the enterprise’s profitable level with its property. ROA shows the company’s effectiveness in using the property to earn the profit. The company’s property is formed from borrowing capital and the owner’s capital (both these capital sources are used to sponsor for the enterprise’s operation. Use ROA because it reflects the ability of using all property, effective use of all company capital sources (including the owner’s capital and borrowing capital used to sponsor for the company’s activities) (relate to the company’s capital structure). Effective expression of investment capital transfer into LN, ROA highly shows that the company earns more money than less quantity of investment. Through comparing to total property, ROA reflected the relationship of profit with managing ability, investment capital and business strategy. Many kinds of indexes which compare to total property will be used. These effective indexes of measurement will be defined and based on the data of financial report such as Financial Statement, profit and loss report. It is important to remember ROA, ROE they are accounting rates of return. These measurements should be called properly return on book assets and return on 31 Performance of the Vietnam listed real estate sector 2007 – 2012 book equity. It would be inappropriate to compare the result to an interest rate observed in the financial markets (Ross/Westerfield/Jordan, Fundamentals of Corporate Finance, 2010). We also thought whether we should use effective index of measurement based on market factor such as TOBIN’S Q or not. TOBIN’S Q index to propose by TOBIN (1969) was used by many researchers (Rashid et al, 2010). TOBIN’S Q measured effectively the enterprise’s operation by comparing the enterprise’s market value to alternative value of total property of enterprise. We not only use purely accounting reports but also through consideration and assessment of market to measure effectively the enterprise. Sometimes, there was a subjective part of establisher. TOBIN’S Q index was asserted by many researchers that it’s rather suitable and meaningful in capital market of upstart economies such as Vietnam) (Shar, 2010). Hence, in this topic, to measure effectively real estate enterprise’s operation, we limit to using two performance measures ROA and TOBIN’S Q because of their suitability and meaningful in the context of real estate. In ROA indexes, profit index was chosen as EBITDA, because of the following reasons: FBITDA was used very well. The profit didn’t eliminate the depreciation, before borrowing interest and tax to eliminate the influences of local tax, accounting regime to reflect best the enterprise’s business profit, business effectiveness to achieve in common context with real estate enterprises of whole country. EBITDA ROA = (3.1) Total assets Market price of owner’s capital + book value of total debt TOBIN’S Q = Total assets (3.2) 32 Performance of the Vietnam listed real estate sector 2007 – 2012 3.2.2 . Independence variables As presented in chapter 2, research topic about the efficiency of real estate enterprise, define the relationship between major factors which effect to the performance, major factor is defined to consider: capital structure, fixed property investment, enterprise size, and enterprise age and enterprise location. For the purpose of assessing meaningfully affected level of the above factors to real estate enterprise’s effectiveness in Vietnam in current economic period finding how to build and develop. 3.2.2.1. Fixed assets Fixed assets are defined as all enterprise properties with big value, using time – rotation – withdrawal over 1 year or 1 business cycle. Including visible, invisible fixed property and hiring financial property, long-term financial investment provisions (the sum of money which the company uses to invest for a long time), undone basic building expense (spent expense with the purpose of increasing business production capacity isn’t completed yet) (Financial Management – Đinh The Hien, 2008). Fixed property and long-term investment showed property value, which the enterprise managed and used for a long time in production and business. Due to the property of topic, consider the enterprise’s effectiveness in correlation relationship with total enterprise resources to operate the business for seeking the relationship between business production operation effectiveness with the factors of management, investment, business, etc., major factors lead to business effectiveness. Therefore, fixed property index is chosen to consider, because it reflects the enterprise’s property, the situation of enterprise property distribution, density of fixed property in total property. From that, consider the suitability of density of fixed 33 Performance of the Vietnam listed real estate sector 2007 – 2012 property with real estate business department, effecting ability to create the condition of improving real estate business effectiveness. Fixed property norm helps assess total scale of property, capacity and capital using qualification of enterprise, simultaneously reflects the characteristic of business operation department, enterprise’s managing decisions about buying, selling fixed property. Original price of fixed assets Tangibility (3.3) = Total assets (Structure of property) 3.2.2.2. Capital structure: Total Debt Capital structure = Total Assets Whereas: Total Debit is defined as follows: Total debit = Total assets – Total Equity A prominent problem in VN enterprises and especially, real estate enterprise is the status of being lacked of the capital to do business, invest, develop and actual state of using high borrowing capital ( high density of borrowing capital and high borrowing interest). This is a stinging practice to hit hard business effectiveness of real estate enterprise as well as overwhelm existing safety of real estate enterprise before constant crisis waves such as foreign enterprise’s competitive erosion. In that context, capital structure is put into to consider, survey, and assess the effect. Heavy dependent status to outside capital (borrowing capital, reinforce by the forms …), VN enterprise with financial lever to put into business effectiveness highly. Growing economic period pulled profit highly for the Bank with leading highest 34 Performance of the Vietnam listed real estate sector 2007 – 2012 borrowing interest expense in the world. And the situation was reserved absolutely when the market fell into the crisis of real estate enterprise, the difficulty and bankrupted (or frozen) rapidly because of high borrowing interest expense and pulled the banks to the crisis of bankruptcy with the series of existing bad debt. The enterprise must pay the expense of high borrowing interest, doesn’t have the resources to accumulate, doesn’t accumulate the resources and grow and continues being bound in that hovering circle without exiting. Therefore, the problems of capital source to develop, suitable capital structure is a big topic which relates to enterprise effectiveness to be surveyed, considered in this thesis like an important independent variable affecting the influence to dependent variable of enterprise effectiveness. 3.2.2.3. Enterprise scale (size): As presented in chapter 2, the factors influence to the enterprise’s business effectiveness in the theory and practice of business in VN; record the effectiveness of increasing, decreasing the expense of enterprise scale clearly. Normally, the enterprises have an influencing big scale or exclusive price or yield. With big or small scale, the influence to the enterprise is also different. The research of Titman and Wessels (1988) showed that the enterprise had a big scale with the advantage thanks to the scale, was easy to penetrate the market to borrow the capital, big financial capacity was easy to create many local budgets (Short and Keasey, 1999) Enterprise scale is often measured by natural logarithm of total special food or turnover. Because total property was used to be the basis of consideration in previous norms and to expand the meaning of thesis observation range and choose, consider the scale according to the turnover. Size = ln (Net turnover) 35 Performance of the Vietnam listed real estate sector 2007 – 2012 3.2.2.4. Enterprise age: Enterprise age has an influencing effect to the enterprise’s effectiveness according to 2 directions. Aged enterprise expresses the enterprise’s existing ability. Normally, young enterprise has big level which isn’t sure in the first years of establishment. In this thesis, age variable of enterprise is defined as follows: Enterprise age = Surveying year – Establishing year 3.2.2.5. The enterprise’s position, location The position in real estate business is meaningful, important (Tran Tien Khai, Real estate principle, 2011). This thesis notices to observe the orientation of position. However, because the limit of information source extracted from financial reports is limited about business location, place of business real estate, and this research proposes to use the location where the enterprise registers to establish and operate as an alternative quantity, consider it as the factor with high influencing level to the enterprise’s business position. The enterprise’s location = the place the enterprise established and put its head office to operate. To consider, analyze influencing effect of factor, position, and location to business effectiveness, I put the factors, position, and location into consideration. I added to the group of representative false variables L for the place where the enterprise establishes (or the place of major head office, enterprise’s business operation) to recurrent equation. Because of listed enterprise also have limitation that most of listed real estate enterprises are placed in 2 big areas as Hochiminh City and Hanoi, last enterprises are in the other provinces it is inconsiderable. Therefore, we put 3 dummy variables as L1: North, L2: Center, L3: South into research model. Dummy variables Lk are binary 36 Performance of the Vietnam listed real estate sector 2007 – 2012 variables, take a value of 1 when the enterprise belongs to the k-th region corresponds to Table 3.3 and take a value of 0 in case of not in that region. Because data is limited, only take related data of the listed company, the number of surveying companies is limited, the number of observing period of time is also limited, the number of observation is little (339 observations). Therefore, to ensure the accuracy of regression analysis, the number of consideration factors is also limited. However, it still follows like original research of Klaus Hammes and Yinghong Chen (2004). Because chosen samples were listed real estate company, the quantity is limited, the number of observation is little (339 observations) to avoid the phenomenon of multi-collinearity , guarantee the reliability of analysis result, I must limit the number of research variables as 5 variables ( property structure, capital structure, firm’s scale, firm’s age and firm’s position-location) to try expressing the highest representative property and reliability of result and the best focus of research, also reflect relatively the performance of real estate enterprise, whereas: the structure of property reflects left side of Financial statement , the structure of capital expresses in right side of Financial statement, both contributes in reflecting whole financial statement and also has the association to the income statement through business profit norm considered from 2 corners of accounting report (ROA) and the market’s assessment index (TOBIN’S Q). Besides, there is the consideration about the scale, age and extremely important factor in real estate business, it’s the position. Some above mentioned weak points will be overcome when research sample is expanded, when the condition of enterprise information declaration is improved, the available of data source is fully. 37 Performance of the Vietnam listed real estate sector 2007 – 2012 3.3. Regression model The thesis uses regression analysis method to verify hypothesizes about the relationship between variables (density/structure of property, capital structure, enterprise scale, enterprise age and regional factors) to the enterprise’s operating effectiveness. The data of this research is cross data as well as time series data so research model is applied regression model of panel data and unbalance. General form of panel data regression model is as follows: Yit = α + ∑ βk Xit + uit Whereas: Yit : Variable measure operating effectiveness of enterprise i at a time t βk : Regression coefficiency of the kth independent variable (k: number of observing variable) α : Constant of regression model Xit : independent variables of enterprise i at a time t uit = λit + εit. Whereas: λit: the factors aren’t put into equation εit: the surplus of contingent change Replace the above referred specific research variables to general regression model, received research models are as follow: Model 1 (EBITDA Model): The relationship to ratio of EBITDA on Total assets ROAit = β0 + β1. Tangbilityit + β2.Debtit + β3.sizeit + β4.ageit + χ.Lkit + εit Model 2 (TOBIN’S Q Model): The relationship to TOBIN’S Q market index TOBIN’S Qit = β0 + β1. Tangbilityit + β2.Debtit + β3.sizeit + β4.ageit + χ..Lkit + εit Whereas, the symbols in the model are explained as follows: ROAit : ratio of EBITDA on total assets 38 Performance of the Vietnam listed real estate sector 2007 – 2012 Tobin’s Qit : ratio between market value and alternative value of total assets Tangibilityit : ratio of fixed assets on total assets (structure of assets) Debtit : Debt ratio (capital structure of enterprise) Sizeit : enterprise’s scale Ageit : enterprise’s age Lkit : group of dummy variables of enterprise’s position-location (take a value of 1 or 0) 3.4. The method of data collection Research data are extracted from yearly financial reports where were audited and declared on official website of HCMC Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX). The enterprises are chosen as the enterprises which belong to listed real estate business department (according to HOSE and HNX’s classification). Due to the property of multi-department operation of Vietnam companies, the companies have the rate of real estate business turnover over 50%/ total turnover is arranged to this real estate business department. Yearly auditing financial reports were collected through 6 years from 2007 to 2012. Through extracted financial report, calculate the norms (research variables). Research sample has a rather high identical property, including 61 companies of real estate business department. Whereas: HOSE: 40 companies, HNX: 21 companies were listed in the table … The list of listed real estate companies). Website: HCMC Stock Exchange : www.hsx.vn Hanoi Stock Exchange : www.hnx.vn 39 Performance of the Vietnam listed real estate sector 2007 – 2012 3.5. The method of data analysis: All yearly financial reports through 6 years from 2007 – 2012 were audited according to the sample including 61 listed companies which belong to collected, gathered real estate business department. Total handled financial reports are 366 reports. From financial reports, proceed extracting, handling data, research norms to define, calculate the indexes of measuring research variables. The data from financial report are considered carefully to define the suitability, reliability, completeness and exactness, choose again some. Then, handling result is put into Eviews 6.0 software to analyze, the technique of studying quantitative analysis is applied including descriptive statistics and deducing statistical analysis. Independent variables are considered to check mutual relationship (correlating analysis). Consider, assess influencing level of independent variable to dependent variable (regression analysis). Technique of panel data regression analysis is used to assess the importance, estimated the effect of independent variable to dependent variable. The amount of data set is increased rather much by the technique combine cross data and time series data. However, to guarantee the exactness of research, I must limit the number of research variable to ensure calculating result to be reflected honestly. I proceed regression analysis of panel data on Eviews 6 software. Both fixed and random effects are applied to define the model of suitable effect by Hausman test. To create a solid basis for the calculation results, proceeds verifying multicollinearity. The recommendation, assessments will be put on the basis of calculating result but will not discuss in-depth the causes or reasons. 40 Performance of the Vietnam listed real estate sector 2007 – 2012 CHAPTER 4: DATA ANALYSIS AND FINDINGS This chapter presents the results of analysis and explains those results. The analyses include descriptive statistics, correlative analysis, and regression analysis of panel data to verify research hypothesizes. 4.1. Descriptive statistics In this part, sample description, the sample’s research variables were observed, calculated average values, standard deviation, the biggest value, the smallest value, and other statistic characteristics. This part was implemented by EVIEW 6.0 software. Research sample includes 61 enterprises operate real estate business department listing on two stock floors Hochiminh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) which were filtered, chosen according to national official norm of classification VSIC 2007 (Viet Nam Standard Industrial Classification 2007) was issued by Decision numbered 10/2007/QD-TTg on 23/1/2007 of Prime Minister. Currently, most Vietnamese companies operate in many departments. Hence, to choose the company with the property, characteristic of real estate business department, must choose the company which has the turnover belonging to real estate business operating field over 50% total turnover (see the appendix of real estate business department). Therefore, the companies in chosen sample have the highest property, characteristic of real estate department. Chosen samples have the highest identification as possible. Real estate companies are observed through 6 years from 2007 to 2013. Research variables include: Y1: Ratio of returns on assets (ROA) Y2: Index of TOBIN’S Q market price 41 Performance of the Vietnam listed real estate sector 2007 – 2012 X1: Ratio of fixed assets on total assets (Tangibility or Structure of assets) X2: Debt ratio (Capital structure) X3: Enterprise scale (SIZE) X4: Enterprise age (AGE) Group of dummy variables Lk: the enterprise’s position, location (L): L1, L2, L3 correspond with the enterprise’s position, location in North, Center, and South of Vietnam, respectively. The research is implemented over two panel data regression models with dependent variables in turn as ROA (EBITDA/Total assets), Tobin’s Q : Model 1: profit rate on total assets (ROA) (Y1), and Model 2: index of market price TOBIN’S Q (Y2) Note: In model 2, due to some companies have the time to list different, hence, in the sample of 61 companies, observable number was decreased compared to model 1 as 220 observable numbers. Descriptive statistic results of variables are presented as follows: 4.1.1. Sample description of model 1 According to the result of descriptive analysis for the enterprises according to EBITDA norm (EBITDA/total assets – Y1) (ROA) of enterprise achieved 0,083, fixed assets / total assets (X1) achieved 0,058, Total debt / total assets (X2) achieved 0,53, firm scale (X3) achieved averagely 25,75 and average establishment year of each company achieved 11,22. With the above mentioned indexes, most companies operating in the field have a positive level of turnover, density of fixed assets / total assets is rather small and the rate of debt / total assets is rather big. 4.1.1.1. Ratio of profit (EBITDA) on total assets 42 Performance of the Vietnam listed real estate sector 2007 – 2012 Sample: 1 339 Y1 X1 X2 X3 X4 L1 0.083000 0.070249 0.610443 -0.186891 0.079453 1.678047 9.828851 0.058731 0.026398 0.770932 0.000000 0.091500 4.202394 27.26433 0.536094 0.552170 0.997113 0.022970 0.203745 -0.301944 2.535354 25.75335 25.97025 29.69845 19.20001 1.672906 -1.006764 4.835550 11.22189 9.000000 33.00000 1.000000 7.052234 0.970711 3.375556 0.289941 0.000000 1.000000 0.000000 0.454407 0.925912 1.857313 0.041420 0.668639 0.000000 1.000000 1.000000 1.000000 0.000000 0.000000 0.199555 0.471400 4.602832 -0.716542 22.18607 1.513432 Jarque-Bera Probability 815.3766 0.000000 9286.525 0.000000 8.176458 0.016769 104.5481 0.000000 55.06817 0.000000 66.68438 0.000000 6377.630 0.000000 60.04588 0.000000 Sum Sum Sq. Dev. 28.05390 2.127394 19.85094 2.821467 181.1997 13.98951 8704.633 943.1327 3793.000 16760.36 98.00000 69.58580 14.00000 13.42012 226.0000 74.88757 Observations 338 338 338 338 338 338 338 338 Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis L2 L3 Table 4.1. Descriptive statistics of variables in the model 1 for whole research samples. The result of analysis showed that average ROA of 61 enterprises through 6 last years was 8,3%. The enterprise’s highest ROA achieved 61,04% and the lowest ROA was -18,69%, whereas average ROA of North and Center was 7,21% (with 112 observable numbers), lower than South as 8,94% (with 226 observable numbers). Descriptive Statistics for Y1 Categorized by values of L3 Sample: 1 339 Included observations: 338 L3 0 1 All Mean 0.072095 0.088404 0.083000 Median 0.057364 0.081681 0.070249 Max 0.610443 0.404361 0.610443 Min. -0.186891 -0.078197 -0.186891 Std. Dev. 0.089612 0.073519 0.079453 Obs. 112 226 338 Table 4.2. Descriptive statistics of ratio of profit on total assets according to geographical zone. From this result, people can see real estate enterprise’s average ROA isn’t also high, even rather low for the 6 years of data. With victorious year but some years were failed seriously. Average ROA of South is higher than average ROA of North and Center but not considerably. 43 Performance of the Vietnam listed real estate sector 2007 – 2012 4.1.1.2. The sample description of independent variables The rate of fixed assets on total assets had its average value for 6 years as 5,87%. This number reflected the value of fixed assets on total assets as rather low, whereas this rate of real estate enterprise achieved the highest value as 77,09% and the lowest value as 0,0%. Through the data, the density of fixed assets/total assets of real estate enterprise was rather low. Debt ratio/total assets (capital structure) had average value as 53,61%, the lowest value as 2,29% and the highest value as 99,71%. Real estate enterprises used financial lever rather high, the rate of debt was much in their structure of capital source, easy to meet the risks when the market has the crisis. Enterprise scale: enterprise’s turnover (equal natural logarit of net turnover) had average value as 25,75, the highest value 29,69 and the lowest value 19,2. So, the difference about enterprise scale is relative. Enterprise age has average value as 11,22 years, the biggest value as 33 years and the smallest value as 1 year. There was rather big difference of age between the enterprises. 4.1.2. Sample description of model 2 4.1.2.1. Index of market value TOBIN’S Q Sample: 1 220 Y2 Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis X1 X2 X3 X4 L1 L2 L3 1.151947 0.971962 6.641745 0.384363 0.736753 3.847279 23.68469 0.055673 0.536685 26.08360 0.027601 0.543196 26.14151 0.348932 0.997113 29.69845 0.001296 0.113688 19.20001 0.070113 0.190315 1.492049 2.339701 -0.066984 -0.840893 8.705801 2.525791 5.164138 12.09091 10.00000 33.00000 3.000000 6.961139 1.053956 3.442988 0.340909 0.000000 1.000000 0.000000 0.475096 0.671249 1.450575 0.036364 0.622727 0.000000 1.000000 1.000000 1.000000 0.000000 0.000000 0.187620 0.485809 4.953558 -0.506401 25.53774 1.256442 Jarque-Bera 4464.739 499.1522 42.52904 38.52766 5555.921 Probability 0.000000 0.000000 0.328594 0.000000 0.000000 0.000000 0.000000 0.000000 2.225863 68.85903 37.26949 Sum 253.4282 12.24800 118.0707 5738.391 2660.000 75.00000 8.000000 137.0000 Sum Sq. Dev. 118.8743 1.076578 7.932170 487.5401 10612.18 49.43182 7.709091 51.68636 44 Performance of the Vietnam listed real estate sector 2007 – 2012 Observations 220 220 220 220 220 220 220 220 Table 4.3 about descriptive statistics of variables in the model 2 for whole research samples. The result of descriptive statistics showed the index of TOBIN’S Q market value had surveying average value through the last 6 years as 1.15 times, real estate enterprise had the highest TOBIN’S Q index as 6.64 times and the smallest index as 0.38 time. There was a rather big difference. Although stock market assessed 61 real estate enterprises surveyed through 6 last years with higher average value than book value (1.15). However, the enterprise was assessed higher 6.64 times than book value, simultaneously the enterprise was only assessed by 0.38 book value. Descriptive Statistics for Y2 Categorized by values of L3 Sample: 1 220 Included observations: 220 L3 0 1 All Mean 1.340244 1.037869 1.151947 Median 1.056881 0.893308 0.971962 Max 6.641745 3.125894 6.641745 Min. 0.384363 0.418485 0.384363 Std. Dev. 1.028111 0.449457 0.736753 Obs. 83 137 220 Table 4.4. TOBIN’S Q descriptive statistics according to geographical zone. Especially, TOBIN’S Q average value of North and Center enterprises is 1.34 times (with 75 observable numbers), higher than South enterprises 1.027 times (with 145 observable numbers). That also showed partly real estate enterprise of North and Center was assessed higher than real estate enterprise of South about market value. 4.1.2.2. Independent variables The ratio of fixed assets on total assets had rather low average value for 6 years as 5,57%, whereas this ratio of real estate enterprise had the highest year as 34,89% and the lowest year as 0,13%. These numbers showed that real estate enterprise’s rate of fixed assets /total assets was rather low. 45 Performance of the Vietnam listed real estate sector 2007 – 2012 Ratio of Debt /total assets (capital structure) had average value as 53,67%, the lowest value as 11,37% and the highest value as 99,71%. All these numbers were in a high level. That showed that most real estate enterprises lacked their capital seriously, had to borrow rather much capital, use many financial levers to create business effectiveness, and capital structure contained latently rather high risks. Enterprise scale (log nepe of turnover) had average value as 26,08, the lowest value was 19,2 and the highest value was 29.69. That showed scale difference between listing real estate enterprises was relative. The age of surveying enterprises had average value as 12.09 years, the biggest value was 33 years and the smallest value was 3 years, and rather big difference about real estate enterprise’s age was surveyed. 4.2. Correlative analysis Implement correlative analysis to assess, measure the relationship between research variables. The results are as follows: The analysis of correlative relationship between the variables in research model for Y1 (EBITDA/Total assets) showed that most variables X1, X2, X3 and X4 have a meaningful correlative relationship with Y1. The above result can be used to be the basis for building regression model (on Panel data) studying explainable relationship between effecting and explainable variables Xi (i = 1 4) for variable Y1. 46 Performance of the Vietnam listed real estate sector 2007 – 2012 Covariance Analysis: Ordinary Sample: 1 339 Included observations: 338 Balanced sample (listwise missing value deletion) Correlation Probability Y1 X1 X2 Y1 1.000000 ----- X1 X2 X3 X4 L1 L2 0.191987 1.000000 0.0004 -----0.134216 -0.057399 1.000000 0.0135 0.2927 ----- X3 0.347657 0.061237 0.269544 1.000000 0.0000 0.2616 0.0000 ----- X4 0.139613 0.090267 0.116820 0.306690 1.000000 0.0102 0.0976 0.0318 0.0000 ----- L1 -0.087038 -0.149132 0.107259 -0.077157 -0.324781 1.000000 0.1102 0.0060 0.0488 0.1570 0.0000 ----- L2 -0.030380 0.078254 0.060015 -0.053985 0.056706 -0.132831 1.000000 0.5778 0.1511 0.2712 0.3224 0.2986 0.0145 ----- L3 L3 0.096761 0.110629 -0.128798 0.097229 0.289068 -0.907722 -0.295282 1.000000 0.0756 0.0421 0.0178 0.0742 0.0000 0.0000 0.0000 ----- Table 4.5. Correlative matrix of research variables in the model 1. TOBIN’S Q Model : Covariance Analysis: Ordinary Sample: 1 220 Included observations: 220 Correlation Probability Y2 X1 Y2 1.000000 ----- X1 X2 X3 0.025684 0.006482 1.000000 0.7048 0.9238 ----- X3 0.264919 0.011386 0.224144 1.000000 0.0001 0.8666 0.0008 ----- L1 L1 L2 L3 -0.120606 1.000000 0.0742 ----- X2 X4 X4 -0.151914 0.207581 -0.032537 0.168889 1.000000 0.0242 0.0020 0.6312 0.0121 ----0.235966 -0.181939 0.163419 -0.116944 -0.400147 1.000000 0.0004 0.0068 0.0152 0.0835 0.0000 ----- L2 -0.081249 0.162000 0.048362 -0.070761 0.056893 -0.139709 1.000000 0.2300 0.0162 0.4754 0.2961 0.4011 0.0384 ----- L3 -0.199384 0.115362 -0.178492 0.141693 0.369351 -0.923991 -0.249573 1.000000 0.0030 0.0878 0.0080 0.0357 0.0000 0.0000 0.0002 ----- Table 4.6. Correlative matrix of research variables in the model 2. 47 Performance of the Vietnam listed real estate sector 2007 – 2012 The correlation of Tobin’s Q – Y2 dependent variables and independent variables has a statistical significant. The above mentioned result described Xi independent variables to be expected the effect to Tobin’s Q with explainable ability about effect relationship according to the above expected research model. In common, with both models 1 and 2, we see that from the table of result for correlative analysis, we didn’t see any correlative coefficient was too big (> 0,5). Therefore, we can say it has rarely the ability of happened effect of multi-collinearity in the models 1 and 2. In both correlation matrix, a largest correlation coefficient is 0.347657 (between Y1 and X3), which has no coefficient larger than 0.9 with p_value smaller 0.05. This shows that the correlation in range of allowing. Dependant variable, accounting index of rate of profit on total assets had a positive correlation with independent variables: density of fixed assets (tangibility), enterprise scale, enterprise age, and enterprise location (L3) with correlative coefficient in turn as 0,19; 0,35; 0,14; 0,09 and had negative correlation with the enterprise’s variables of capital structure (debt ratio) as -0,13. This correlation showed the ability of model 1’s suitability was very high. Dependent variable of market index TOBIN’S Q, the rate between market price with the book value of enterprise assets value had a negative correlation with density variable of fixed assets, enterprise age, and enterprise location with correlative coefficient in turn as -0,12; -0,15; -0,23 and positive correlation with the variable of debt ratio, enterprise scale with correlative coefficient in turn as 0,25 and 0,26. This correlation also showed the ability of model 2’s suitability was very high. Both dependant variables Y1 (ROA) and Y2 (TOBIN’S Q) had a clear correlation with Tangibility, Debt, Size, and Age independent variables. This 48 Performance of the Vietnam listed real estate sector 2007 – 2012 suggested that changing, adjusting the levels of effecting factors can change (increase/decrease) real estate enterprise’s effectiveness and their influencing level to ROA and TOBIN’S Q will have the difference. This showed between the assessment of business effectiveness by accounting index – rate of profit on total assets and index of market assessment - TOBIN’S Q, there was a rather big difference. Here is also a reason to use two research targets ROA and TOBIN’S Q in the research of real estate sector performance. 4.3. Regression analysis and hypothesis verification As presented in Chapter 3, the selected criteria to measure performance are ROA and Tobin’s Q. For ROE, as described in Chapter 3, ROE expressed relationship to business performance, management capability. But the equity criteria are adjusted frequently in Vietnamese enterprises. The increase or reduction of equity is usually performed during the year, resulting in the change in ROE, which not be used really for business. Hence the determination of ROE has to get average numbers which is not accurate, did not reflect accurately the efficiency of the business. So this chapter will focus on the analysis of selected indicators ROA and Tobin’s Q. And to extend the multi-dimensional observations, the thesis also analyzes the ROE criteria but will be presented in Appendix 3. 4.3.1. EBITDA Model (Model 1) Researching impacted relationship between influential factors to the norm [EBITDA/Total assets]. The research proceeded surveying 61 enterprises with the chain of time from 2007-2012. The above mentioned data is established into Panel data and built a regression model to serve the target of analysis. Decisive procedure of research analysis is established specifically as follows: 49 Performance of the Vietnam listed real estate sector 2007 – 2012 − The 1st step: The research describes about common investing sample for the enterprises according to each target. − The 2nd step: The research of correlative relationship between explainable variables affects to dependent variables. − The 3rd step: Build original regression model (Pooled model), study the relationship of effecting explainable variables to target variable (dependant variable). − The 4th step: Build regression model of fixed effect factors and study the difference of fixed effect factors to each enterprise. − The 5th step: Build regression model of random effect factors. − The 6th step: Implement verifying Hausman test choose the suitable model. − The 7th step: The conclusion of model First, we start with the original regression model (Pool method). We examine the model by whole independent variables and the dummy variable (regions variables). The regions dummy variable has three characteristic as L1 (North), L2 (Center), L3 (South), (m = 3). So the dummy variables can be put into the analysis to be (m -1) = 2 variables. We selected two variables L1 and L3 to take into the model, obtain dummy variable L2 to hidden variable (reference variable). The result of analysis showed that, ¾ expected independent variables to affect to dependent variable Y1. Whereas, variable X4 - the enterprise’s establishment years (firm age) is high implying insignificant (Prob X4 = 0,5315) it didn’t have statistic meaningful effect to the index Y1 – EBITDA/Total enterprise assets yet. Meaningful effect variables include: (i) fixed assets /total assets (X1), (ii) Total debt / Total assets (X2) and (iii) company scale (X3). 50 Performance of the Vietnam listed real estate sector 2007 – 2012 The result of analysis also showed that, The probability of regional dummy variables L is too high (Prob L1 = 0.8586 , Prob L3 = 0.8576), has not statistically significant. We can conclude regional dummy variables to have no statistical significant impact on indicators Y1 yet. That means regional factor not affect dependent variable Y1. And so on, the regional variables will not be included in the regression analysis with panel data model to the random effect model (REM) in next steps (and according to theory of econometric is without dummy variable in fixed effect model – FEM). This may seem absurd at first glance, inconsistent with the fact that in the real estate business, position location has important implications for business performance. Dummy variables L in this study just is the location of the firm, where the business is headquartered, it is not the location of the property which is doing business. This result suggests that in Vietnam, enterprises in different regions may have different things but not due to differences in location-based, enterprises in different regions still have business conditions as good. The regional differences can only be explained by other factors, such as the results of this study have provided evidence clearly shows. Simultaneously, the F test (Prob Fstatistics = 0) showed that the model had the ability of using for the process of studying the above mentioned effect relationship. However, the model’s weak point didn’t show clearly the difference of enterprises during the process of studying the effect of effecting factors to Y1. So that, regression result continues studying two models about fixed effect factors and random effect factors in the model. Dependent Variable: Y1 Method: Panel Least Squares Sample: 1 339 51 Performance of the Vietnam listed real estate sector 2007 – 2012 Periods included: 6 Cross-sections included: 61 Total panel (unbalanced) observations: 338 Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 L1 L3 -0.361297 0.132303 -0.091368 0.018549 0.000386 0.003730 0.003576 0.063472 0.043392 0.020280 0.002545 0.000616 0.020919 0.019922 -5.692262 3.049006 -4.505265 7.287423 0.626422 0.178309 0.179524 0.0000 0.0025 0.0000 0.0000 0.5315 0.8586 0.8576 R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.201457 0.186982 0.071641 1.698814 414.9353 13.91752 0.000000 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 0.083000 0.079453 -2.413818 -2.334643 -2.382263 1.227972 Table 4.9. Regression result of Pooled method in the model 1. Build the model of fixed effect factors (FEM). The result of verification showed ¾ factors had a statistical meaningful influence to Y1. Whereas, differently from original regression model (Pooled model), the model of fixed effect factors (FEM – fixed effect model) showed the result of variable Total fixed assets/Total assets didn’t have any statistical meaning. Three last independent variables are meaningful statistically in affecting Y1. The index R2 = 0.553436 (R2 ≠0) indicates this FEM model has significant of verification. Simultaneously, the F test with the value Probstatistics =0 insisted that the above mentioned model had the ability of using for the process of studying, forecasting effect factors (Xi) to Y1. Dependent Variable: Y1 Method: Panel Least Squares Sample: 1 339 Periods included: 6 Cross-sections included: 61 Total panel (unbalanced) observations: 338 Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 -0.382610 0.051075 -0.128832 0.026786 -0.014094 0.081616 0.073421 0.028527 0.003197 0.002035 -4.687946 0.695651 -4.516190 8.377643 -6.925111 0.0000 0.4872 0.0000 0.0000 0.0000 52 Performance of the Vietnam listed real estate sector 2007 – 2012 Effects Specification Cross-section fixed (dummy variables) R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.553436 0.448747 0.058991 0.950017 513.1591 5.286485 0.000000 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 0.083000 0.079453 -2.651829 -1.916628 -2.358820 2.036755 Table 4.10. Regression result of FEM in the model 1. The research about different influences of enterprises considered in specific model about effect relationship of effect factors to Y1. The verification of Redundant Fixed effects was used and the result insisted that the different enterprises, had different fixed effect factors. This means 61 enterprises operate in the field of real estate. Although operating in a same department, with different enterprises, there are different particular points. Therefore, they created different fixed effect factors. Redundant Fixed Effects Tests Equation: Untitled Test cross-section fixed effects Effects Test Cross-section F Cross-section Chi-square Statisti c 3.5871 14 196.48 2214 d.f. (60,273 ) 60 Prob . 0.00 00 0.00 00 Table 4.11. Redundant fixed effect testing result of the model 1. The above mentioned process of research continued being implemented the research with the model of random effect factors (REM). The result of model showed that REM model had the condition of random effect factors rather equivalently with original regression model (Pool data). Whereas, the firm’s age has no meaningful in influencing index Y1. Three last factors are meaningful in effecting Y1. 53 Performance of the Vietnam listed real estate sector 2007 – 2012 Dependent Variable: Y1 Method: Panel EGLS (Cross-section random effects) Sample: 1 339 Periods included: 6 Cross-sections included: 61 Total panel (unbalanced) observations: 338 Swamy and Arora estimator of component variances Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 -0.408863 0.115202 -0.101043 0.021333 -0.000920 0.064469 0.049914 0.021547 0.002607 0.000763 -6.342026 2.308036 -4.689434 8.182278 -1.205771 0.0000 0.0216 0.0000 0.0000 0.2288 Effects Specification S.D. Cross-section random Idiosyncratic random 0.033500 0.058991 Rho 0.2439 0.7561 Weighted Statistics R-squared Adjusted R-squared S.E. of regression F-statistic Prob(F-statistic) 0.183147 0.173335 0.062997 18.66547 0.000000 Mean dependent var S.D. dependent var Sum squared resid Durbin-Watson stat 0.049305 0.069124 1.321560 1.544240 Unweighted Statistics R-squared Sum squared resid 0.187854 1.727754 Mean dependent var Durbin-Watson stat 0.083000 1.181190 Table 4.12. Regression result of REM in the model 1. Consider specifically in 3 above mentioned regression models, original regression model (Pooled) has similar characteristics affected randomly as REM. However, because regression result didn’t discriminate particular effect factors of each model yet. Therefore, original regression model won’t be chosen to serve this research. Therefore, two FEM and REM models are two models with high ability in studying the above mentioned relationship. Hausman test was used to implement the problem of choosing 1 of 2 above mentioned models. 54 Performance of the Vietnam listed real estate sector 2007 – 2012 Hausman test was implemented and based two hypothesizes that: (H0) showed that there wasn’t any specific relationship between random effect components and independent variables Xi. This hypothesis’s result led the condition of model of random effect components as suitable. The hypothesis (H1) asserted that there were specific relationships between random components with independent variables in the model. This hypothesis’s condition is rather suitable with the model of fixed effect factors. The result of Hausman test showed ProbHausman =0, suitably with the condition of hypothesis H1, the hypothesis of choosing the model of fixed effect factors (FEM). Correlated Random Effects - Hausman Test Equation: Untitled Test cross-section random effects Test Summary Cross-section random Chi-Sq. Statistic Chi-Sq. d.f. Prob. 52.168226 4 0.0000 Random Var(Diff.) Prob. 0.115202 -0.101043 0.021333 -0.000920 0.002899 0.000350 0.000003 0.000004 0.2337 0.1372 0.0032 0.0000 Cross-section random effects test comparisons: Variable X1 X2 X3 X4 Fixed 0.051075 -0.128832 0.026786 -0.014094 Table 4.13. Hausman testing result of the model 1. The conclusion of model 1 (EBITDA Model): according to the above mentioned procedure of analysis, combined with Hausman test, the result of model of fixed effect factors can study effect factors to Y1 as suitable for the research. The conclusions from the model of fixed effect factors will be chosen for next statements during the process of research with effect factors to Y1 – EBITDA/Total assets. 55 Performance of the Vietnam listed real estate sector 2007 – 2012 4.3.2. TOBIN’S Q Model (Model 2) Tobin’s Q is called as descriptive index of ratio between market value and alternative value of total assets is called as dependent variable Y2. In the research, Tobin’s Q model surveys 59 enterprises for 6 years from 2007-2012 (two enterprises were excluded because its listed time does not coincide with the time of this research). The above mentioned data were established into Panel data and built regression model for the target of analysis. Research model about Tobin’s Q continued being studied for explainable relationship by independent variables including: Total fixed assets / Total assets (X1), Total debt / Total assets (X2), Enterprise scale (X3) and the enterprise’s age (X4), Group of dummy variables Lk: the enterprise’s position, location (L): L1, L2, L3 correspond with the enterprise’s position in North, Center, and South of Vietnam. The description of value of each variable: Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis Y2 1.151947 0.971962 6.641745 0.384363 0.736753 3.847279 23.68469 X1 0.055673 0.027601 0.348932 0.001296 0.070113 2.339701 8.705801 X2 0.536685 0.543196 0.997113 0.113688 0.190315 -0.066984 2.525791 X3 26.08360 26.14151 29.69845 19.20001 1.492049 -0.840893 5.164138 X4 12.09091 10.00000 33.00000 3.000000 6.961139 1.053956 3.442988 Jarque-Bera Probability 4464.739 0.000000 499.1522 0.000000 2.225863 0.328594 68.85903 0.000000 42.52904 0.000000 Sum Sum Sq. Dev. 253.4282 118.8743 12.24800 1.076578 118.0707 7.932170 5738.391 487.5401 2660.000 10612.18 Observations 220 220 220 220 220 Table 4.14. Descriptive statistics of variables (not include dummy variables) in the model 2 for whole research samples. Original regression model (Pool data): The result of analysis showed that, ¾ independent variables included of Total fixed assets / Total assets (X1), Total debt / Total assets (X2) and Firm’s age (X4) 56 Performance of the Vietnam listed real estate sector 2007 – 2012 affected badly statistical meaning to Tobin’s Q variable. Only the last independent variables company scale (X3) had a statistical meaningful effect to Tobin’s Q. The result of analysis also showed that, The probability of regional dummy variables L is too high (Prob L3 = 0.9367 , Prob L1 = 0.1412), has not statistically significant to Tobin’s Q variable. Regional dummy variables have no statistical significant impact on indicators Y2 yet. That means regional factor not affect dependent variable Y2. And so on, the regional variables will not be included in the regression analysis with panel data model to the random effect model (REM) in next steps. As discussed in the part of regression analysis of EBITDA model, in reality, the real estate business, position location has important implications for business performance but not with the location of the firm, where the business is headquartered, it is not the location of the property which is doing business. This result suggests that in Vietnam, enterprises in different regions may have different things but not due to differences in location-based, enterprises in different regions still have business conditions as good. The regional differences can only be explained by other factors, such as the results of this study have provided clearly evidence. Simultaneously, the F test had Probstatistics for rather small value. The above model has still using ability for researching the above mentioned relationships. However, weak point of original regression model didn’t describe the difference between particular characteristics of enterprises during affecting process of independent variables to Tobin’s Y2 variable yet. Therefore, the information about the difference between the enterprises can’t still be studied clearly if using original regression research model (pool data). Dependent Variable: Y2 Method: Panel Least Squares Sample: 1 220 Periods included: 6 Cross-sections included: 59 Total panel (unbalanced) observations: 220 57 Performance of the Vietnam listed real estate sector 2007 – 2012 Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 L1 L3 -2.895907 -0.613924 -0.347585 0.163196 -0.010965 0.386846 0.020115 0.840392 0.684285 0.255074 0.032635 0.007386 0.261964 0.252987 -3.445899 -0.897176 -1.362681 5.000668 -1.484508 1.476713 0.079510 0.0007 0.3706 0.1744 0.0000 0.1392 0.1412 0.9367 R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.164254 0.140712 0.682954 99.34874 -224.7174 6.977025 0.000001 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 1.151947 0.736753 2.106522 2.214501 2.150127 1.168737 Table 4.16. Regression result of Pooled method in the model 2. To overcome weak point of original regression model, research regression model about fixed effect factors (FEM) and the model of studying random effect factors (REM) were used to serve the target of studying effect factors to Tobin’s Q. Research result according to regression model of fixed effect factors showed it wasn’t same to original regression model, the model of fixed effect factors had the result of variable Total debt / total assets (X2) a statistical significant, whereas, enterprise scale variable (X3) had a bad statistical significant in affecting Y2 variable (Tobin’s Q). Particularly, total fixed assets/total assets (X1)’s variable of FEM model had a same result in the result of original regression model. Simultaneously, the enterprise’s age variable had also statistical meaningful effects to Y2. Otherwise, statistical value F (Probf_statistics) had a rather small value, this model had using, studying abilities to meet the topic’s target. Dependent Variable: Y2 Method: Panel Least Squares Sample: 1 220 Periods included: 6 Cross-sections included: 59 Total panel (unbalanced) observations: 220 Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 6.828522 0.925016 -1.523472 1.291805 1.612951 0.403713 5.286032 0.573493 -3.773651 0.0000 0.5671 0.0002 58 Performance of the Vietnam listed real estate sector 2007 – 2012 X3 X4 -0.034678 -0.331316 0.043936 0.028192 -0.789288 -11.75234 0.4311 0.0000 Effects Specification Cross-section fixed (dummy variables) R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.673376 0.544391 0.497300 38.82719 -121.3707 5.220569 0.000000 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 1.151947 0.736753 1.676098 2.647909 2.068541 2.388546 Table 4.17. Regression result of FEM in the model 2. FEM model had the ability of overcoming weak point of original regression model in the point; FEM regression model had the ability of verifying particular difference between the enterprises during the process of studying the effect of independent variables to Tobin’s Q variable. The verification of Redundant Fixed effect showed the result with a rather small meaningful level value. That showed that the enterprises are different, have the ability for different fixed effects. These particular points have the ability of being created from particular characteristics of each enterprise. Redundant Fixed Effects Tests Equation: Untitled Test cross-section fixed effects Effects Test Cross-section F Cross-section Chi-square Statistic 4.591961 218.221309 d.f. Prob. (58,157) 58 0.0000 0.0000 Table 4.18. Redundant fixed effect testing result of the model 2. Simultaneously, the research also built random effect factors (REM model) to consider random effect factors with influential ability to the enterprise. The result of 59 Performance of the Vietnam listed real estate sector 2007 – 2012 building the model of studying random effect factors showed similar characteristics with original regression model. The model of random effect factors showed the result of variable for Total fixed assets/Total assets (X1) and Total debt/total assets (X2) had a bad effect to Tobin’s Q (Y2) variable. Two last variables affected statistical meaning to Y2. Combining with F test of model for a rather small value can insist that this model had a meeting ability for the topic’s research target. Dependent Variable: Y2 Method: Panel EGLS (Cross-section random effects) Sample: 1 220 Periods included: 6 Cross-sections included: 59 Total panel (unbalanced) observations: 220 Swamy and Arora estimator of component variances Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 -1.741828 -0.892929 -0.343963 0.131635 -0.029211 0.776443 0.712166 0.243261 0.030382 0.007564 -2.243344 -1.253821 -1.413970 4.332654 -3.862004 0.0259 0.2113 0.1588 0.0000 0.0001 Effects Specification S.D. Cross-section random Idiosyncratic random 0.299170 0.497300 Rho 0.2657 0.7343 Weighted Statistics R-squared Adjusted R-squared S.E. of regression F-statistic Prob(F-statistic) 0.092003 0.075110 0.623842 5.446246 0.000340 Mean dependent var S.D. dependent var Sum squared resid Durbin-Watson stat 0.718671 0.633838 83.67352 1.340416 Unweighted Statistics R-squared Sum squared resid 0.102201 106.7253 Mean dependent var Durbin-Watson stat 1.151947 1.050898 Table 4.19. Regression result of REM in the model 2. 60 Performance of the Vietnam listed real estate sector 2007 – 2012 Some comments about original regression model (pool data) are for some weak points; simultaneously original regression model had also some similar characteristics with the model of random effect factors. Therefore, two models were put into the verification to choose the best model for the process of verification including FEM and REM models. Hausman test was implemented to solve the above mentioned target. The result of Hausman test showed the value of meaningful level of Hausman test was rather low. Therefore, the model of fixed effect factors was used to study effect relationship of influential factors to Tobin’s Q. Correlated Random Effects - Hausman Test Equation: Untitled Test cross-section random effects Test Summary Cross-section random Chi-Sq. Statistic Chi-Sq. d.f. Prob. 135.409220 4 0.0000 Random Var(Diff.) Prob. -0.892929 -0.343963 0.131635 -0.029211 2.094430 0.103808 0.001007 0.000738 0.2091 0.0003 0.0000 0.0000 Cross-section random effects test comparisons: Variable X1 X2 X3 X4 Fixed 0.925016 -1.523472 -0.034678 -0.331316 Table 4.20. Hausman testing result of the model 2. The conclusion about two research models of effect factors to EBITDA/ Total assets and Tobin’s Q showed both models were suitable with using the model of fixed effect factors (FEM). Therefore, the result of two above mentioned models was used to serve the conclusions about the effect of effect factors to EBITDA/Total assets and Tobin’s Q. 61 Performance of the Vietnam listed real estate sector 2007 – 2012 With the model of effect factor to EBITDA/Total assets (Y1): − [Total fixed assets / total assets] does not influence to [EBITDA/Total assets] ( the value of Prob test = 0.4872. too high). Vietnam real estate enterprises are less investment of fixed assets and Tangibility have too less impact to Y1. − Total debt/total assets influence to EBITDA/Total assets negatively, with the value of Prob. Test =0.0000, the statistic significant level gain 99%. Vietnam real estate enterprises uses loan so many. − The enterprise scale influence to EBITDA/Total assets positively, with the value of Prob. Test =0.0000, the statistic significant level gain 99%. Suitable with the practice of Viet Nam, large-scale enterprises have many advantages in business. − The enterprise age influence to EBITDA/Total assets positively, with the value of Prob. Test =0.0000, the statistic significant level gain 99%. Suitable with the practice of Viet Nam, longtime enterprises have a little and many real estate firms go bankrupt more quickly. With the model of effect factors to Tobin’s Q: − [Total fixed assets /total assets] does not influence to Tobin’s Q (the value of Prob test = 0.5671. too high). As above explained. − Total debt/ total assets influence to Tobin’s Q negatively, with the value of Prob. Test =0.0002, the statistic significant level gain 99%. As above explained. − Enterprise scale does not influence to Tobin’s Q (the value of Prob test = 0.4311. too high). The stock market has assessment of the relationship between enterprise scale and business efficiency is quite different from remarks of accounting numbers. 62 Performance of the Vietnam listed real estate sector 2007 – 2012 − Enterprise’s age influence to Tobin’s Q negatively, with the value of Prob. Test =0.0000, the statistic significant level gain 99%. The stock market was fairly accurate assessment of the Vietnam real estate business. 4.3.3. The verification of statistical hypothesizes Based on done results of data analysis, we have the result of verifying research hypothesizes as follows: For EBITDA model: a) The density of fixed assets on total assets Hypothesis H1: There exists relationship impact of the density of fixed property/ total assets to the enterprise’s operating effectiveness (EBITDA/ Total assets). The result: Reject Comment: research result showed that the density of fixed assets on total assets does not influence to the enterprise’s operating effectiveness (EBITDA). We known that, for industrial enterprises, fixed property played an important role for the enterprise’s operation and investing fixed property to much will lead business capital to become exhausted. A big part of capital source is attracted to the investment of fixed property, leads losing the balance of roving capital source and the exploitation isn’t effective with the investment of fixed property. But for real estate enterprises, they invest very little in fixed assets (as described in the descriptive statistics). Hence, the proportion of assets has no significant impact to EBITDA as other factors. b) Debt ratio on total property (capital structure) Hypothesis H2: There exists relationship impact of the proportion of debt ratio on total property (capital structure) to the enterprise’s operating effectiveness (EBITDA/ Total assets). The result: Accept 63 Performance of the Vietnam listed real estate sector 2007 – 2012 Comment: capital structure (debt ratio) influences to the enterprise’s operating effectiveness to some level with negative effect. This result is also suitable with the research of many researchers Rath & al (2003), Zeiturn & Titan (2007). Most Vietnam enterprises lacked the capital seriously. However, borrowing too much lead decreasing business effectiveness due to pay high interest expense through many years. Moreover, when the market meets the difficulty, the source of debt payment will be decreased or weaker and can make the enterprise bankrupt. c) Enterprise scale Hypothesis H3: There exists relationship impact of enterprise scale to the enterprise’s operating effectiveness (EBITDA/ Total assets). The result: Accept Comment: Enterprise scale is defined by natural log of net turnover. The enterprise and scale have the influence, the bigger the enterprise is, the more the effectiveness is due to the effect of decreasing the expense. An abundant source of turnover creates a good payment condition and has many budgets for the enterprise (Short and Keasy) (1999). However, until some level, the effectiveness is decreased. To maintain enterprise yield, must decrease selling price. That leads decreasing the enterprise’s profitable productivity. d) Enterprise age Hypothesis H4: There exists relationship impact of enterprise age to the enterprise’s operating effectiveness (EBITDA/ Total assets) The result: Accept Comment: Enterprise’s age has an influencing effect to the enterprise’s operating effectiveness. Aged enterprise expresses a good existing ability, whereas 64 Performance of the Vietnam listed real estate sector 2007 – 2012 young enterprise has an unsure big level for the first years of establishment. Age enterprise sometimes contains accumulated difficulties latently to solve isn’t simple. e) The enterprise’s position, location Hypothesis H5: There is not exist relationship impact of enterprise’s position, location to the enterprise’s operating effectiveness (EBITDA/ Total assets). The result: Accept Comment: This conclusion seems surprised. With real estate field, real estate value depends on essentially that real estate’s position, location. However, the factors of location, position in this research are the position, location of putting head office, registering to establish the enterprise, not the position, location of business investment real estate. Hence, there wasn’t any influencing effect to the enterprise’s business operating effectiveness. This is consistent with findings of research of Klaus Hammes and Yinghong Chen (2004) on Swedish real estate sector. For TOBIN’S Q Model: f) The proportion of fixed assets on total assets Hypothesis H6: There exists relationship impact of the density of fixed assets / total assets to the enterprise’s market index TOBIN’S Q. The result: Reject Comment: In this case, the impact of the ratio fixed assets/total assets to the accounting index of business performance EBITDA/Total assets and the market index of business performance Tobin's Q are the same. The market and the enterprise had the same impact assessment, there is no impact. Hence, the proportion of assets has no significant impact to EBITDA and Tobin’s Q as other factors. g) Ratio of Debt on total assets (capital structure) 65 Performance of the Vietnam listed real estate sector 2007 – 2012 Hypothesis H7: There exists relationship impact of the proportion of debt ratio on total property (capital structure) to the enterprise’s market index TOBIN’S Q. The result: Accept Comment: Once more, we see that capital structure affects business performance of enterprises which in this case is the impact on the market indicators of business performance Tobin's q. h) Enterprise scale Hypothesis H8: There exists relationship impact of enterprise scale to the enterprise’s market index TOBIN’S Q. The result: Reject Comment: In the h) item, we said that the enterprise and scale have the influence, the bigger the enterprise is, the more the effectiveness is due to the effect of decreasing the expense. An abundant source of turnover creates a good payment condition and has many budgets for the enterprise (Short and Keasy) (1999). And said that until some level, the effectiveness is decreased. to maintain enterprise yield, must decrease selling price. That leads decreasing the enterprise’s profitable productivity. But in this item, the content has changed, the stock market did not evaluate the effectiveness of enterprise by its scale. i) Enterprise age Hypothesis H9: There exists relationship impact of enterprise age to the enterprise’s market index TOBIN’S Q. The result: Accept Comment: Enterprise’s age has an influencing effect to the enterprise’s operating effectiveness. There were similarities in the effects of firm’s age on the enterprises effective and the market index Tobin’s Q. 66 Performance of the Vietnam listed real estate sector 2007 – 2012 j) The enterprise’s position, location Hypothesis H10: There is not exist relationship impact of enterprise’s position, location to the enterprise’s market index TOBIN’S Q. The result: Accept Comment: One more again, this conclusion are repeats. As well as the impact of enterprise’s locations to business efficiency, enterprise’s locations do not impact on Tobin's - indicators of stock market. The summary of verifying results of research hypothesizes Hypothesis H1 H2 Content There exists relationship impact of the density of fixed property/ total assets to the enterprise’s operating effectiveness (EBITDA/ Total assets). Result Reject There exists relationship impact of the proportion of debt ratio on total property (capital structure) to the enterprise’s operating effectiveness Accept (EBITDA/ Total assets). H3 There exists relationship impact of enterprise scale to the enterprise’s operating effectiveness (EBITDA/ Total assets). Accept H4 There exists relationship impact of enterprise age to the enterprise’s operating effectiveness (EBITDA/ Total assets) Accept H5 There is not exist relationship impact of enterprise’s position, location to the enterprise’s operating effectiveness (EBITDA/ Total assets). Accept H6 There exists relationship impact of the density of fixed property/ total assets to the enterprise’s market index TOBIN’S Q. Reject H7 H8 There exists relationship impact of the proportion of debt ratio on total property (capital structure) to the enterprise’s market index TOBIN’S Accept Q. There exists relationship impact of enterprise scale to the enterprise’s market index TOBIN’S Q. Reject 67 Performance of the Vietnam listed real estate sector 2007 – 2012 H9 There exists relationship impact of enterprise age to the enterprise’s market index TOBIN’S Q. Accept H10 There is not exist relationship impact of enterprise’s position, location to the enterprise’s market index TOBIN’S Q. Accept This chapter presented the results of data analysis including descriptive statistics, correlative analysis and recurrent analysis of table data. The result of analysis has the evidence that there is a difference about the profit between the enterprises in business zone. However, the reason doesn’t come from the region but also capital structure, property structure. Otherwise, the investment of fixed property isn’t sure to bring business effectiveness for the enterprise and debt ratio to some level and will decrease the enterprise’s business effectiveness. 68 Performance of the Vietnam listed real estate sector 2007 – 2012 CHAPTER 5: THE CONCLUSION AND RECOMMENDATION This chapter presents collected conclusions and research results, brings some orientations of improving the effectiveness, output for real estate enterprise. The chapter’s final part will present last limitations and orient next researches. 5.1. The conclusions The process of researching the performance of real estate sector listing on VN stock market from 2007-2012 was proceeded to survey the effect of major factors which recognize real estate enterprise to business operating effectiveness of Vietnamese real estate enterprise. Quantitative research result insisted some hypothesizes of research model in a fixed level. The research proceeded studying the basis of theory, some previous researches about the problem of effectiveness, efficiency of real estate enterprise in the world and Vietnam. Through that, it brought research model including dependent and independent variables. Dependent variable includes 2 variables as variable ratio of profit on total enterprise property (ROA) which expresses arisen profit from 1 VND of enterprise property and TOBIN’S Q market index variable expresses the assessment of stock market about the ratio between enterprise property value (market value) with that property’s book value. Independent variable includes 7 variables as the ratio between fixed property value with total enterprise property value (TAN), the rate of debt (DEBT) for enterprise scale (SIZE), enterprise age (AGE), the enterprise’s position, location (L) was separated including 03 dummy variables (L1, L2, L3 in proportion to 3 Northern, Central, and Southern zones). The research was implemented on all enterprises posting on Vietnamese stock market (HOSE, HNX) which belongs to real estate department. These enterprises are divided the subphylum according to national official subphylum norm of 2 HCMC and Hanoi stock 69 Performance of the Vietnam listed real estate sector 2007 – 2012 transaction services. Total number of companies in the case of survey is 61 companies which were implemented, surveyed for constant time from 2007 to 2012, through 6 years, achieved the biggest number of surveying samples as 366 samples. Surveying information was extracted from yearly audited financial reports. The information was collected from the website of HCMC and Hanoi Stock Transaction Service, enterprises, stock company and financial website pages. The research proceeded the statistics of descriptive sample, correlative analysis between research variables, regression analysis of unbalanced panel data were implemented on research model including 7 independent variables affecting to 2 dependent variables. The results of regression analysis were presented there was not a relationship between the enterprise’s fixed property density with business operating effectiveness EBITDA/ Total assets and the market index Tobin’s Q. The result also showed there was a relationship between the enterprise’s debt ratio (called as capital structure, financial lever) and enterprise’s age with the enterprise’s business operating effectiveness as also with the market index Tobin’s Q. For enterprise scale, there is relationship between enterprise’s scale (log nepe of net return) with firm performance EBITDA/Total assets and there are not between enterprise’s scale (log nepe of net return) with the market index Tobin’s Q. Research result also provided the evidence that: didn’t observe and see the influence of enterprise position, location to business operating effectiveness of VN real estate enterprise. VN real estate enterprise in the zones exists a difference about business effectiveness but that difference isn’t due to different zone but capital structure, property structure, enterprise scale (in this research, it is the enterprise’s turnover). 70 Performance of the Vietnam listed real estate sector 2007 – 2012 In conclusion, the research found clear evidence that the different real estate enterprises has different performances, the difference was not due to regional differences but are due to the impact of the capital structure (negatively) , enterprise’s age (negatively) as well as a portion of the impact of enterprise’s turnover (positively), etc. The results are also shown that Vietnam listed real estate firm have the proportion of fixed assets on total assets (tangibility) at low level and tangibility isn’t impact on firm performance. This thing should be noted due to a one of factors which Vietnam’s Banks consider when lending that are fixed assets. The findings can offer hints for improving performance of Vietnam real estate firm. 5.2. Recommendations Based on studying, surveying results, the research bring some judgments and recommendations to improve business effectiveness for Vietnamese real estate sector. A common status of VN real estate enterprise is the status of being lacked of the capital seriously. This status doesn’t also exclude big real estate enterprises of VN real estate market. The surveying samples include listed enterprises. That means the enterprises have the good condition to reinforce the capital by many different channels, have more reinforcing advantages than other VN real estate enterprises (as great majority of VN real estate department). However, listed real estate enterprises still meet the difficulties because of using borrowing capital, reinforcing capital too much. That led to difficult circle of unpayable accumulated debt. Borrowing much with the highest interest rate in the world, real estate enterprises had headache, fell into difficult status, high risk, and made real estate be threatened to a covering big bankruptcy. This effect’s influence can be affected to other markets such as capital market, stock market, labour market, building material production departments … Otherwise, real estate enterprise’s density of fixed property was very low. That 71 Performance of the Vietnam listed real estate sector 2007 – 2012 expressed that the enterprises were invested a bad material basis. Hence, where did borrowing money go? It entered a very big part in the expenses of borrowing interest and lubricating expense. High borrowing interest expense and lasted project implementing time swallowed most business profit of real estate enterprise. “The disease of VN real estate enterprise: lacked the capital, knowledge, and experience” (Dang Hung Vo said). About real estate enterprise, need to have a reasonable business strategy in VN real estate market which there is currently a weak and disordered legal system. Consider carefully new projects to have the effect but become less effective because the time was lasted, the expense increased constantly, the law wasn’t clear. Consider using and managing the capital in the context of investment and management. Using borrowing capital is necessary with VN real estate enterprise. However, with the highest interest premises in the world, the situation of inflation isn’t stable, and the enterprises are easy to be fallen into the crisis of payment. The enterprises need to invest modern equipments, material facilities to serve the business, train methodically the force of management – workers, create more values and take them to be the basis for the development. About business environment, this research implies that real estate enterprise’s expense for using the capital was high, lubricating expenses were high, and project implementing expense was high. In the market of explosion, there was a super profit, but in a quiet market, it fell rapidly into the crisis. Actual state of real estate enterprises which invested fixed property badly, accumulated the property and the capital was little, and enterprise longevity wasn’t high. The bigger enterprise scale is, the more difficult, dangerous it is. These results stated the need of improving the efficiency for VN real estate area through improving whole legal system, 72 Performance of the Vietnam listed real estate sector 2007 – 2012 reorganizing capital market according to the orientation of decreasing the interest and bank expenses. 5.3. The limitation and orientation for next researches 5.3.1. The research’s limitation Research result helps understand important role of managing the capital, operating the enterprise with the enterprise’s business operating effectiveness. From that, it can bring strategic orientations, methods to improve the effectiveness, efficiency of VN real estate enterprise. However, the research also existed some limitations. + The topic’s research sample only limited in 61 big real estate enterprises posting on stock market (HOSE and HNX), didn’t proceed a wide research for all VN real estate enterprise yet as the majority. Due to the limitation about the report and information of Vietnam, didn’t study the sub-sector in VN real estate business department because of the property of multi-department operation of real estate enterprise. That’s why it’s very difficult to separate the enterprises according to the sub-sector, lead to lacking of research sample. + Beside that, the period of surveying the research was expanded to 6 years. However, need to have a longer period, at least 10 years. + Due to short research time, only in the framework of thesis, hence I don’t expand, consider many other effecting factors to have the more diversified research yet. Due to the limitation about information source: the number of observable sample is limited, leads to the limitation about the number of observable variables. 5.3.2. Next orientation In next orientations of kind of this research should have implementing the process of research with bigger size of sample, expand for more real estate 73 Performance of the Vietnam listed real estate sector 2007 – 2012 enterprises. Simultaneously, increase the period of research to 10 years. 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Websites: http://www.ssc.gov.vn/portal/page/portal/ubck http://www.sbv.gov.vn/wps/portal/vn http://www.gso.gov.vn http://www.hsx.vn http://www.hnx.vn http://cophieu68.com http://cafef.vn http://www.wikipedia.org 78 Performance of the Vietnam listed real estate sector 2007 – 2012 Appendices Appendix 1: List of RE companied listed on HOSE and HNX Name Date of establishment Date of listing No. Code Province 1 ASM CTCP Đầu Tư & Xây Dựng Sao Mai Tỉnh An Giang 2/5/1997 18/1/2010 An Giang 2 BCI CTCP Đầu Tư Xây Dựng Bình Chánh 1/1/1995 16/3/2009 Hồ Chí Minh 3 BSC CTCP Dịch Vụ Bến Thành 4 C21 5 CCL 6 CTX 7 D11 CTCP Thế Kỷ 21 CTCP Đầu Tư & Phát Triển Đô Thị Dầu Khí Cửu Long TCT Cổ Phần Đầu Tư Xây Dựng & Thương Mại Việt Nam CTCP Địa Ốc 11 8 D2D 9 DIG 10 DRH CTCP Đầu Tư Căn Nhà Mơ Ước 11 DTA CTCP Đệ Tam 10/10/2003 16/7/2010 Hồ Chí Minh 12 DXG CTCP DV & XD Địa Ốc Đất Xanh 1/1/2003 22/12/2009 Hồ Chí Minh 13 HAG 1/1/1993 22/12/2008 Hồ Chí Minh 14 HAR 7/10/2007 17/1/2013 Hồ Chí Minh 15 HDC CTCP Hoàng Anh Gia Lai CTCP Đầu Tư Thương Mại BĐS An Dương Thảo Điền CTCP PT Nhà Bà Rịa - Vũng Tàu 5/29/1990 8/10/2007 Vũng Tàu 16 HPR CTCP Đầu Tư Xây Dựng Hồng Phát 1/1/1993 12/5/2011 Cần Thơ 17 HQC CTCP TV - TM - DV Địa Ốc Hoàng Quân 1/1/2000 20/10/2010 18 ICG 6/14/1997 21/4/2009 Hà Nội 19 IDJ 3/15/2007 13/9/2010 Hà Nội 20 IDV CTCP Xây Dựng Sông Hồng CTCP ĐT Tài Chính Quốc Tế & Phát Triển Doanh Nghiệp IDJ CTCP Phát Triển Hạ Tầng Vĩnh Phúc 6/16/2003 1/6/2010 21 IJC CTCP Phát Triển Hạ Tầng Kỹ Thuật 3/1/2007 19/4/2010 Bình Dương 22 ITA CTCP Đầu Tư Công Nghiệp Tân Tạo 4/14/1996 15/11/2006 Hồ Chí Minh 23 ITC CTCP Đầu Tư & KD Nhà Intresco 2/18/2000 19/10/2009 Hồ Chí Minh 24 KAC CTCP Đầu Tư Địa Ốc Khang An 2/1/2002 27/10/2010 Hồ Chí Minh 25 KBC TCT PT Đô Thị Kinh Bắc - CTCP 3/27/2002 18/12/2009 26 KDH CTCP Đầu Tư & KD Nhà Khang Điền 12/1/2001 1/2/2010 Hồ Chí Minh 27 KHA CTCP Xuất Nhập Khẩu Khánh Hội 2/17/1982 19/8/2002 Hồ Chí Minh 28 LHG CTCP Long Hậu 5/23/2006 23/3/2010 Long An 29 NBB CTCP Đầu Tư Năm Bảy Bảy 11/1/2004 18/2/2009 Hồ Chí Minh 30 NDN CTCP Đầu Tư Phát Triển Nhà Đà Nẵng 5/11/1992 21/4/2011 Đà Nẵng 31 NLG 1/1/1992 8/4/2013 Hồ Chí Minh 32 NTB 1/1/1999 17/5/2010 Hồ Chí Minh 33 NTL CTCP Đầu Tư Nam Long CTCP ĐT XD & Khai Thác Công Trình Giao Thông 584 CTCP Phát Triển Đô Thị Từ Liêm 6/16/2004 21/12/2007 34 NVN CTCP Nhà Việt Nam 2/28/2002 30/3/2010 12/4/2003 5/1/2011 Hồ Chí Minh 1/1/1994 15/7/2011 Hồ Chí Minh 12/15/2007 3/3/2011 12/26/1996 24/5/2012 Hà Nội 3/6/1989 25/2/2011 Hồ Chí Minh CTCP PT Đô Thị Công Nghiệp Số 2 10/14/1992 14/8/2009 Đồng Nai TCT Cổ Phần Đầu Tư Phát Triển XD 5/26/1990 19/8/2009 Vũng Tàu 6/3/2006 26/7/2010 Hồ Chí Minh Sóc Trăng Hồ Chí Minh Vĩnh Phúc Bắc Ninh Hà Nội Hồ Chí Minh 79 Performance of the Vietnam listed real estate sector 2007 – 2012 35 PDR CTCP Phát Triển BĐS Phát Đạt 9/13/2004 30/7/2010 36 PFL CTCP Dầu Khí Đông Đô 6/15/2007 17/11/2010 37 PPI CTCP Phát Triển Hạ Tầng & BĐS Thái Bình Dương 4/13/1994 12/4/2010 Hồ Chí Minh 38 PTL CTCP ĐT Hạ Tầng & Đô Thị Dầu Khí 11/17/2006 22/9/2010 Hồ Chí Minh 39 PV2 CTCP Đầu Tư PV2 6/29/2007 16/12/2010 Hà Nội 40 PVL CTCP Địa Ốc Dầu Khí 9/20/2007 15/4/2010 Hà Nội 41 PXA 1/24/2008 22/2/2011 Nghệ An 42 PXL 8/9/2007 9/12/2010 Hồ Chí Minh 43 QCG CTCP Đầu Tư & Thương Mại Dầu Khí Nghệ An CTCP Đầu Tư Xây Dựng Thương Mại Dầu Khí IDICO CTCP Quốc Cường Gia Lai 1/1/1994 9/8/2010 44 RCL CTCP Địa Ốc Chợ Lớn 12/31/2003 14/6/2007 Hồ Chí Minh 45 SCR CTCP Địa Ốc Sài Gòn Thương Tín 3/29/2004 9/11/2010 Hồ Chí Minh 46 SDU CTCP Đầu Tư XD & PT Đô Thị Sông Đà 3/24/2007 28/9/2009 Hà Nội 47 SJC CTCP Sông Đà 1.01 11/24/2003 21/11/2007 Hà Nội 48 SJS CTCP ĐT PT Đô Thị & KCN Sông Đà 9/1/2001 6/7/2006 Hà Nội 49 SRA CTCP Sara Việt Nam 1/1/2004 18/1/2008 Hà Nội 50 STL CTCP Sông Đà Thăng Long 6/1/2005 23/9/2008 51 SZL CTCP Sonadezi Long Thành 8/8/2003 9/9/2008 Đồng Nai 52 TDC CTCP KD & PT Bình Dương 3/20/2002 4/5/2010 Bình Dương 53 TDH CTCP Phát Triển Nhà Thủ Đức 54 TIX CTCP SXKD XNK DV & ĐT Tân Bình 55 VC3 56 Hồ Chí Minh Hà Nội Gia Lai Hà Nội 2/2/1990 14/12/2006 Hồ Chí Minh 11/11/1981 25/11/2009 Hồ Chí Minh CTCP Xây Dựng Số 3 5/5/1993 13/12/2007 Hà Nội VCR CTCP Đầu Tư & Phát Triển Du Lịch Vinaconex 1/1/2005 10/5/2010 Hà Nội 57 VHH CTCP Đầu Tư & XD Viwaseen - Huế 5/26/2006 28/7/2010 Huế 58 VIC Tập đoàn VINGROUP - CTCP 3/5/2003 19/9/2007 59 VNI CTCP Đầu Tư Bất Động Sản Việt Nam 1/1/2003 9/9/2009 Hồ Chí Minh 60 VPH CTCP Vạn Phát Hưng 9/9/1999 9/9/2009 Hồ Chí Minh 61 VRC CTCP Xây Lắp & Địa Ốc Vũng Tàu 8/1/1980 26/7/2010 Hà Nội Vũng Tàu 80 Performance of the Vietnam listed real estate sector 2007 – 2012 Appendix 2: Description of variables Variables Definitions Y1 Ratio of returns on assets (ROA) Y2 Index of TOBIN’S Q market price X1 Ratio of fixed assets on total assets (Tangibility or Structure of assets) X2 Debt ratio (Capital structure) X3 Enterprise scale (SIZE) X4 Enterprise age (AGE) Lk Group of dummy variables of the enterprise’s position, location L1 the enterprise’s position, location in North of Vietnam L2 the enterprise’s position, location in Center of Vietnam L3 the enterprise’s position, location in South of Vietnam 81 Performance of the Vietnam listed real estate sector 2007 – 2012 Appendix 3: Regression analysis of dependent variable ROE Researching relationship between influential factors to the norm ROE. The research proceed is surveying 61 enterprises with the time series from 2007 to 2012. The above mentioned data is established into Panel data and built a regression model to serve the target of analysis. According to the result of descriptive analysis for the enterprises according to ROE norm (Y3) of enterprise achieved 0,138, fixed property / total property (X1) achieved 0,058, Total debt/ total property (X2) achieved 0,53, company scale (X3) achieved averagely 25,75 and average age achieved 11,22. With the above mentioned indexes, most companies operating in the field have a positive level of turnover, fixed property / total property is rather small and the rate of debt/ total property is rather big. Sample: 1 339 Y3 X1 X2 X3 X4 L1 Mean Median Maximum Minimum Std. Dev. Skewness Kurtosis 0.138094 0.117050 1.472300 -1.894400 0.222836 -1.154767 29.27720 0.058731 0.026398 0.770932 0.000000 0.091500 4.202394 27.26433 0.536094 0.552170 0.997113 0.022970 0.203745 -0.301944 2.535354 25.75335 25.97025 29.69845 19.20001 1.672906 -1.006764 4.835550 11.22189 9.000000 33.00000 1.000000 7.052234 0.970711 3.375556 0.289941 0.000000 1.000000 0.000000 0.454407 0.925912 1.857313 Jarque-Bera Probability 9799.541 9286.523 8.176457 104.5481 55.06817 66.68438 0.000000 0.000000 0.016769 0.000000 0.000000 0.000000 6377.630 0.000000 60.04588 0.000000 Sum Sum Sq. Dev. 46.67570 19.85094 181.1997 8704.633 3793.000 98.00000 16.73403 2.821467 13.98951 943.1327 16760.36 69.58580 14.00000 13.42012 226.0000 74.88757 338 338 Observations 338 338 338 338 338 338 L2 L3 0.041420 0.668639 0.000000 1.000000 1.000000 1.000000 0.000000 0.000000 0.199555 0.471400 4.602832 -0.716542 22.18607 1.513432 Descriptive Statistics for Y3 Categorized by values of L3 Sample: 1 339 Included observations: 338 L3 0 1 All Mean 0.117196 0.148450 0.138094 Median 0.106550 0.119250 0.117050 Max 1.305600 1.472300 1.472300 Min. -1.894400 -0.873600 -1.894400 Std. Dev. 0.280561 0.187659 0.222836 Obs. 112 226 338 82 Performance of the Vietnam listed real estate sector 2007 – 2012 The analysis of correlative relationship between the variables in research model for Y3 ROE showed that most variables X1, X2, X3 and X4 have a meaningful correlative relationship with Y3. The above result can be used to be the basis for building regrsession model (on Panel data) studying explainable relationship between effecting and explainable variables Xi for variable Y3. Covariance Analysis: Ordinary Sample: 1 339 Included observations: 338 Balanced sample (listwise missing value deletion) Correlation Probability Y3 Y3 1.000000 ----- X1 X2 X3 X4 X1 0.037201 1.000000 0.4955 ----- X2 0.050039 -0.057399 1.000000 0.3591 0.2927 ----- X3 0.265817 0.061237 0.269544 1.000000 0.0000 0.2616 0.0000 ----- X4 0.078104 0.090267 0.116820 0.306690 1.000000 0.1519 0.0976 0.0318 0.0000 ----- L1 L1 -0.056608 -0.149132 0.107259 -0.077157 -0.324781 1.000000 0.2994 0.0060 0.0488 0.1570 0.0000 ----- L2 -0.027280 0.078254 0.060015 -0.053986 0.056706 -0.132831 0.6172 0.1511 0.2712 0.3224 0.2986 0.0145 L3 L2 L3 1.000000 ----- 0.066116 0.110629 -0.128798 0.097229 0.289068 -0.907722 -0.295282 1.000000 0.2254 0.0421 0.0178 0.0742 0.0000 0.0000 0.0000 ----- As other dependent variables, I also examine variable ROE through three models: pool model, fixed effect model, random effect model. Firstly, I take care of the original regression model (Pool method), examine the model by whole independent variables and the dummy regional variable (the regions dummy variable has three characteristic as L1 (North), L2 (Center), L3 (South), (m = 3), so the dummy variables can be put into the analysis to be (m -1) = 2 variables, I 83 Performance of the Vietnam listed real estate sector 2007 – 2012 selected two variables L1 and L3 to take into the model, obtain dummy variable L2 to hidden variable (reference variable)). Dependent Variable: Y3 Method: Panel Least Squares Sample: 1 339 Periods included: 6 Cross-sections included: 61 Total panel (unbalanced) observations: 338 Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 L1 L3 -0.788332 0.040957 -0.015895 0.035925 -0.000512 0.000225 0.019505 0.191797 0.131121 0.061282 0.007692 0.001861 0.063211 0.060199 -4.110252 0.312360 -0.259367 4.670670 -0.275204 0.003558 0.324011 0.0000 0.7550 0.7955 0.0000 0.7833 0.9972 0.7461 R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.073025 0.056222 0.216481 15.51202 41.16056 4.345921 0.000307 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 0.138094 0.222836 -0.202133 -0.122958 -0.170579 1.433520 Regression result of Pooled method in the ROE model. The result showed that, ¾ independent variables do not affect to dependent variable Y3. Whereas, variables X1, X2, X4 is high implying insignificant (Prob: 0.755; 0.7955; 0.7833) it didn’t have statistic meaningful effect to the index Y3 – ROE yet. Meaningful variables is only company scale (X3). The result of analysis also showed that, The probability of regional dummy variables L is too high (Prob L1 = 0.9972 , Prob L3 = 0.7461), has not statistically significant. We can conclude regional dummy variables to have no statistical significant impact on indicators Y3 yet. => regional factor not affect dependent variable Y3. And so on, the regional variables will not be included in the regression analysis with panel data model to the random effect model (REM) in next steps (and according to theory of econometric is without dummy variable in fixed effect model – FEM). 84 Performance of the Vietnam listed real estate sector 2007 – 2012 Simultaneously, the R2 = 0.073 so small, showed that Pool model does not match the research sample, does not explain the volatility of Y3. So that, regression continues studying two models about fixed effect factors and random effect factors in the model. Dependent Variable: Y3 Method: Panel Least Squares Sample: 1 339 Periods included: 6 Cross-sections included: 61 Total panel (unbalanced) observations: 338 Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 -0.718311 -0.196192 -0.144746 0.057188 -0.046986 0.266454 0.239701 0.093133 0.010439 0.006644 -2.695814 -0.818486 -1.554197 5.478572 -7.071415 0.0075 0.4138 0.1213 0.0000 0.0000 Effects Specification Cross-section fixed (dummy variables) R-squared Adjusted R-squared S.E. of regression Sum squared resid Log likelihood F-statistic Prob(F-statistic) 0.394898 0.253043 0.192590 10.12579 113.2441 2.783812 0.000000 Mean dependent var S.D. dependent var Akaike info criterion Schwarz criterion Hannan-Quinn criter. Durbin-Watson stat 0.138094 0.222836 -0.285468 0.449733 0.007541 2.052607 Regression result of fixed effect model (FEM) in the ROE model. The result showed ¾ factors had a statistical meaningful influence to Y3. Whereas, variable X1 (Tangibility) didn’t have any statistical meaning. Three last independent variables are meaningful statistically in affecting Y1. And the F test with the value Probstatistics = 0 insisted that the above mentioned model had the ability of using for the process of studying, forecasting effect factors (Xi) to Y3. The research about different influences of enterprises considered in specific model about effect relationship of effect factors to Y3, the verification of Redundant Fixed effects was used and the result insisted that the different enterprises, had different fixed effect factors. This means 61 enterprises operate in the field of real 85 Performance of the Vietnam listed real estate sector 2007 – 2012 estate. Although operating in a same department, with different enterprises, there are different particular points. Therefore, they created different fixed effect factors. Redundant Fixed Effects Tests Equation: Untitled Test cross-section fixed effects Effects Test Statistic Cross-section F Cross-section Chi-square 2.431364 144.703560 d.f. Prob. (60,273) 60 0.0000 0.0000 Redundant fixed effect testing result of the ROE model. The above mentioned process of research continued being implemented the research with the model of random effect factors (REM). The result of model showed that REM model had the condition of random effect factors rather equivalently with original regression model (Pool data). Whereas, the firm’s size (X3) has meaningful in influencing index Y3 - ROE. Three last factors are not meaningful in effecting Y3. Dependent Variable: Y3 Method: Panel EGLS (Cross-section random effects) Sample: 1 339 Periods included: 6 Cross-sections included: 61 Total panel (unbalanced) observations: 338 Swamy and Arora estimator of component variances Variable Coefficient Std. Error t-Statistic Prob. C X1 X2 X3 X4 -0.836115 0.026717 -0.036711 0.039224 -0.001626 0.188144 0.137724 0.061760 0.007668 0.001957 -4.444027 0.193993 -0.594410 5.115065 -0.830796 0.0000 0.8463 0.5526 0.0000 0.4067 Effects Specification S.D. Cross-section random Idiosyncratic random 0.063712 0.192590 Rho 0.0986 0.9014 Weighted Statistics R-squared Adjusted R-squared S.E. of regression F-statistic Prob(F-statistic) 0.066113 0.054895 0.206176 5.893549 0.000136 Mean dependent var S.D. dependent var Sum squared resid Durbin-Watson stat 0.108183 0.211828 14.15534 1.559634 Unweighted Statistics R-squared 0.069241 Mean dependent var 0.138094 86 Performance of the Vietnam listed real estate sector 2007 – 2012 Sum squared resid 15.57534 Durbin-Watson stat 1.417442 Regression result of REM in the ROE model. Consider specifically in 3 above mentioned regression models, original regression model (Pooled) has similar characteristics affected randomly as REM. However, because regression result didn’t discriminate particular effect factors of each model yet. Therefore, original regression model won’t be chosen to serve this research. Therefore, two FEM and REM models have ability in studying the above mentioned relationship. Hausman test was used to implement the problem of choosing 1 of 2 above mentioned models. Hausman test was implemented and based two hypothesizes that: (H0) showed that there wasn’t any specific relationship between random effect components and independent variables Xi. This hypothesis’s result led the condition of model of random effect components as suitable. The hypothesis (H1) asserted that there were specific relationships between random components with independent variables in the model. This hypothesis’s condition is rather suitable with the model of fixed effect factors. The result of Hausman test showed ProbHausman =0, suitably with the condition of hypothesis H1, the hypothesis of choosing the model of fixed effect factors (FEM). Correlated Random Effects - Hausman Test Equation: Untitled Test cross-section random effects Test Summary Cross-section random Chi-Sq. Statistic Chi-Sq. d.f. Prob. 53.761343 4 0.0000 Cross-section random effects test comparisons: 87 Performance of the Vietnam listed real estate sector 2007 – 2012 Variable X1 X2 X3 X4 Fixed -0.196192 -0.144746 0.057188 -0.046986 Random Var(Diff.) Prob. 0.026717 -0.036711 0.039224 -0.001626 0.038489 0.004859 0.000050 0.000040 0.2559 0.1212 0.0112 0.0000 Hausman testing result of the ROE model. The conclusion of ROE Model: according to the above mentioned procedure of analysis, combined with Hausman test, the result of model of fixed effect factors can study effect factors to Y3 as suitable for the research. 88 [...]... of the Vietnam listed real estate sector? 3 What is a solution to improve performance of Vietnam listed real estate firms according to this research result? 1.6 Structure of the thesis To achieve the research objectives we proposed, the thesis is organized in the layout which consists of 5 chapters and specific contents are as follows: 9 Performance of the Vietnam listed real estate sector 2007 – 2012. .. order to improve the performance of Vietnam listed real estate firms 8 Performance of the Vietnam listed real estate sector 2007 – 2012 1.3 Significance of the study: The performance of the real estate sector in one country not only concerns the creditors, investors, policy makers and tax authorities in that country, but also their counterparts in other closely related countries The study would provide... physical infrastructure in period of modernization and 2 Performance of the Vietnam listed real estate sector 2007 – 2012 industrialization of the country However, the rapid development of real estate sector in the context of its causes is the real estate market boom as government policies to boost the real estate and economic development of Vietnam received inflows of foreign direct investment poured... real estate market as well 1.2 The research’s purpose The study aim to solving issues arises as follow: To investigate and study of the performance of the Vietnam listed real estate firm (follow the approach of Klaus Hammer and Yinghong Chen, 2004) To analyze and assess the impact of the main factors on the performance of the Vietnam listed real estate firm Through these goals in order to improve the. .. findings can offer hints for improving performance of Vietnam real estate firm Keywords: performance, real estate, panel data ix x Performance of the Vietnam listed real estate sector 2007 – 2012 CHAPTER 1: INTRODUCTION This chapter presents the reasons lead to the subject of the research, the necessity of the research, discloses the purposes and goals of the research, identify research objectives and... associated with macroeconomic policies and events in the economy The failure of the real estate firms in business partly reflects the professionalism of the real estate firms in Vietnam is still low Many real estate firms race to investment in the 5 Performance of the Vietnam listed real estate sector 2007 – 2012 project while the schedule of RE project is very complex and required enormous resources, especially... activity, and real estate sales figures are closely watched by investors on Wall Street because of the effect real estate has on the nation’s economy Real estate also represents a significant share of our accumulated national wealth The total value of owneroccupied housing and investible commercial real estate in the United States is 1 Performance of the Vietnam listed real estate sector 2007 – 2012 estimated... high demand on this sector, Vietnam s population is increasing though land is limited, real estate is still the potential business Looking at the income statement of several real estate companies, few have positive profit, however; most have losses 4 Performance of the Vietnam listed real estate sector 2007 – 2012 In the current crisis, after a period of bubble growth, the real estate market went down... accounting, the business performance relate to the concept of Profit: “profit is the difference between the purchase and the component costs of delivered goods and/or services and any operating or other expenses” (Wikipedia) There are several kinds of profit measures: Gross profit = sales revenue – cost of goods sold (COGS); Net profit = gross profit – expenses 11 Performance of the Vietnam listed real estate. .. performance done in Vietnam, only a few macroeconomic study have been performed In order to evaluate the performance of 7 Performance of the Vietnam listed real estate sector 2007 – 2012 Vietnam RE sector among the hot stage of developing Vietnam s economy, it is essential to conduct a formal analysis This study attempts to provide empirical evidence on the performance changes of Vietnam RE sector arising ... performance of the Vietnam listed real estate firm Through these goals in order to improve the performance of Vietnam listed real estate firms Performance of the Vietnam listed real estate sector 2007. .. period of modernization and Performance of the Vietnam listed real estate sector 2007 – 2012 industrialization of the country However, the rapid development of real estate sector in the context of. .. data ix x Performance of the Vietnam listed real estate sector 2007 – 2012 CHAPTER 1: INTRODUCTION This chapter presents the reasons lead to the subject of the research, the necessity of the research,