The overall objective is based on the fundamental theories of capital structure and empirical research on capital structure and financial performance of the firm, whereby the author develops and analyzes the relationship between capital structure and financial performance. It then determines the optimal debt threshold for the Tourism and travel companies (TTCs) of Hue City.
INTRODUTION SIGNIFICANCE OF THE RESERCH Tourism is an indispensable demand in the cultural and social life of the world; is a hobby and an active leisure activity] of man In economic terms, the tourism sector is prioritized by the world's developing countries because of the rapid growth of the sector, as well as the increasing contribution to GDP of each country According to the World Tourism and Travel Council's (WTTC) 2015 report, tourism and travel generated 284 million jobs, revenue of $ 7.2 trillion, contributing nearly 9.8% to the GDP of global In Vietnam in 2015, the tourism and travel industry directly attracts 2.78 million jobs (accounting for 5.2% of total employment), including indirect employment of 6.03 million, contributing to direct and indirect GDP, respectively, 6.6% and 13.9% of GDP For Hue City, tourism is the most important economic sector, contributing more than 50% of GDP in the past few years, as a key sector of the local economic development strategy to become the "Tourism City" and having competition with the" tourist spots "in the region and the world Hue is a rare tourist destination which has abundant natural and historical tourism resources which are recognized by UNESCO Over the past few years, the leaders of the provincial and municipal levels have come up with many solutions to promote domestic and foreign tourists, reflected in the number of tourists and tourism revenue have increased steadily over the years However, businesses involved in tourism services are still quite young, expressed in numbers, but small capitalization, business efficiency of enterprises in the industry is low, even many enterprises lost many years continuously A number of studies on the capital structure of the tourism industry and tourism business in the world have shown the relationship between financial performance and capital structure such as: Li Peijie, Wang Xinsheng, said that the Chinese travel industry is using equity, which limits the use of debt, resulting in poor capital efficiency and the development of the tourism industry; Hotels in Thailand use high debt ratio leading to very low financial efficiency (Pattweekongka, 2014); Research on Sri Lankan hotels and restaurants found evidence that low debt-to-equity ratios generated higher returns than firms with high debt ratios (Ajanthan,2013) Domestic capital structure studies also provide evidence that the irrational capital structure negatively affects financial performance As a result, does the tourism business in Hue operate inefficiently resulting from the unreasonable capital structure? For that reason, the author chose the subject "Capital structure of tourism service enterprises in Hue City in the economic market" as a research thesis 1.1 Objectives of the study The overall objective is based on the fundamental theories of capital structure and empirical research on capital structure and financial performance of the firm, whereby the author develops and analyzes the relationship between capital structure and financial performance It then determines the optimal debt threshold for the Tourism and travel companies (TTCs) of Hue City Specific goals include: Measure the impact of capital structure on the financial performance Determine the optimal debt threshold to maximize corporate financial performance Analysis of other factors affecting financial performance of TTCs Hue; Proposing to build a reasonable capital structure for TTCs Hue, contributing to improve the financial efficiency of enterprises Questions to answer: TTCs Hue managers are interested in how capital structure is structured? Does the capital structure affect the financial performance of the Hue Tourism and Training Department? and in what direction? Is there an optimal capital structure for TTCs Hue? What policy implications are needed to restructure to improve the financial performance of the business? 1.1 Object and scope of the study Research subjects include capital structure components, financial efficiency, optimal capital structure and the relationship between capital structure and financial efficiency of TTCs Hue The study area is TTCs Hue for the period 2013-2016 1.2 Research data Firstly, the primary data was collected in 2015 through a survey of 80 TTCs representatives in Hue to provide a basis for assessing and analyzing the current situation of capital structure management Participants are representatives of enterprises including: director, deputy director, chief accountant, business owner Secondly, the secondary data extracted from the financial statements of 144 TTCs Hue from 2013 to 2016 is taken from the Tax Office of Thua Thien Hue Province 1.3 Research Methods Qualitative research using questionnaire interviewing The questionnaire was based on the theory of capital structure, then interviewed and adjusted to complete the questionnaire in line with the research objectives The research process is divided into two phases The first phase was a survey on TTCs Hue The second stage, from the survey results, authorizes descriptive statistics to reflect the structure of capital management, the manager's views on the capital structure, the relationship between capital structure and financial efficiency Quantitative research methodology: Using a regression model to quantify the correlation between capital structure and financial efficiency, determine the optimal capital structure for TTCs Hue In detail: The use of regression data for the table includes: Pooled OLS regression, FEM based regression approach, and regression based randomization (REM) After choosing the regression method appropriate to the model, the author conducts the model selection test and defect assessment test of the selected model In cases where the pattern of defects is violated by the regression hypothesis, the author will proceed with the general linear regression (GLS) and the GMM regression The methods are implemented under the support of Stata software 12.0 1.4 New contributions of the thesis After studying the empirical research at home and abroad about the capital structure related to the topic According to the author, the subject has the following new points: Firstly, through the survey and quantitative study of the factors affecting the financial effectiveness, the thesis presents the current situation of management of capital structure of Hue tourism business enterprises, the relationship between the structure capital and financial efficiency Secondly, the quantitative study of the impact of debt ranges on the financial performance of enterprises, which can determine the optimal capital structure for TTCs Hue Thirdly, through the survey and verification results, the authors have come up with specific solutions in line with the orientation of sustainable development of the Hue tourism industry in the direction of improving financial efficiency and improving service quality travel of business and local 1.5 The meaning of the thesis Scientific significance: The results of the thesis provide empirical evidence on the relationship between capital structure and financial efficiency, as well as other factors affecting the financial effectiveness of TTCs Hue stakeholders In addition, the thesis also determines the optimal debt level at which the financial performance of enterprises is highest Practical implication: The results of the study are useful for providing solutions for TTCs Hue developers to better manage their capital structure to improve financial efficiency In addition, relevant stakeholders such as banks and policy makers can refer to supporting Hue enterprises in raising capital as well as improving the quality of tourism services 1.6 The structure of the thesis Apart from the introduction, the list of tables, the list of figures, the list of abbreviations, conclusions, appendices, reference documents, the subject consists of chapters as follows: CHAPTER 1: THEORY OF CORPORATE STRUCTURE AND BUSINESS ECONOMY CHAPTER CAPITAL STRUCTURE OF THE ENTERPRISES OF TOURISM SERVICES IN HUE CHAPTER CAPITAL RESTRICTION SOLUTIONS FOR HUE TOURIST SERVICES IN THE ECONOMIC MARKET CHAPTER 1: THEORY OF CORPORATE STRUCTURE AND BUSINESS ECONOMY 1.1 Theoretical foundation on corporate capital structure, financial efficiency Chapter presents an overview of the basic theories of capital structure and the relationship of capital structure to corporate financial performance Background theory is designed to explain the relationship between capital structure and financial performance 1.2 The relationship between capital structure and financial performance, optimal capital structure and empirical research The goal of a manager is to build a capital structure to maximize the value of the business, or achieve the highest financial performance Consequently, executives are always looking for an optimal capital structure that minimizes financial costs and increases the value of the business Domestic and foreign empirical research on the relationship between structure and financial performance has shown that there is a link between capital structure and financial performance depending on the sample but for other impacts together The study of optimal capital structure also provides an optimal level of debt for businesses But no research is done in the tourism industry Empirical research is used primarily and applies specific quantitative methods such as correlational analysis, multivariate linear regression analysis with panel data in combination with appropriate tests Financial reporting is the main source of data for identifying financial indicators in the empirical model of previous empirical studies Local studies have included empirical analysis of quantitative factors affecting financial performance that have little association with simultaneous analysis of qualitative factors Quantitative analyzes can produce very specific and detailed results in terms of impact and impact on corporate financial performance, but focusing on that will not clearly identify the nature and This causes the effect 1.3 Discussion and evaluation Thus, based on previous models of financial performance and capital structure, the author proposes a research model that inherits some of the earlier ideas, while complementing and perfecting the causal analysis The relationship between financial efficiency and capital structure, the optimal capital structure of TTCs Hue CHAPTER CAPITAL STRUCTURE OF THE ENTERPRISES OF TOURISM SERVICES IN HUE 2.1 Concept of tourism and travel services Tran Nhan defines tourism as the process of human activity leaving the homeland to another place with the main purpose being the recognition of material values, unique spirituality, unique, different from the homeland, not for profit purposes (Nguyen Ba Lan, 2007) Under Chapter V of the Tourism Act 2017, the tourism business line covers the following industries: + Business travel + Trading in tourist accommodation establishments + Business travel tourists + Trading in other tourist services 2.2 Situation of tourism development in Vietnam and Hue city In the period from 2005 to 2016, the Party and State have oriented to develop tourism into a spearhead economic growth Since then, the tourism sector has seen strong development in the number of domestic and foreign visitors; the role of tourism in the GDP structure is high; and the quality of tourism is improving and improving The role of the tourism industry is reflected in the increasing contribution of GDP, in 2005 this figure is 6.74%, from 2009 to 2016 on average contributes to the GDP of the country is 10% Hue's tourism industry has grown rapidly in recent years, showing the great potential In 2016, tourism contribution accounted for 50% of GDP of the whole province has shown the importance of the sector for the common economic development 2.3 The financial efficiency of TTCs Hue Figure 2.1 ROA and ROE ratios of TTCs Hue Source: calculated by the author In the period 2013-2016, the average ROA and ROE of the 144 TTCs in Hue are 2.71% and 1.74%, respectively This figure tells us that for every 100 dongs of corporate assets, the company has collected 2.71 dong of after tax profit, 100 dong of which it collected 1.74 dong This shows that the financial performance of Hue enterprises is relatively low compared to the tourism industry listed on the stock market (ROA is 5.11% in 2009-2015 period, Le Thanh Ngoc et al , 2017) Figure 2.1 shows that the number of enterprises with ROA and ROE> is 73.61% of businesses in the year, the number of negative financial performance decreases by 2014 but starts to increase in 2015 and 2016 Figure 2.1 ROA and ROE have been decreasing over the years, from ROA and ROE of 3.09% and 1.77%, respectively, to 2.98% and 1.62% in 2016 respectively The reasons for the financial effects of tourism in Hue and Viet Nam are low: First, the competition between tourism enterprises is becoming more fierce so the situation "dumping" to attract customers Therefore, the profit margin of enterprises decreased, so although the turnover has increased, but profit is not recovered (Dao Loan, 2016), Mai Phuong (2013) for enterprises in hue, the enterprises devalue tours and hotel room rates to attract customers, especially for small businesses making large-scale businesses more difficult Customers of Hue market are popular objects, spending per client is not high so the strategy of reducing the price achieved the effect of attracting customers, but reducing the profit margin of the business Second, traditional tourism enterprises are suffering from fierce competition, without any breakthrough in quality of service or products Meanwhile, businesses with financial potential and large scale investment in diversifying products and services such as hotels, restaurants, events; Real estate investment will generate higher profit margin (Kieu Linh, 2017) The situation shows that the characteristics of Hue small and medium enterprises are low level of management, therefore, they face many difficulties in capital and strategy of expanding services or investment In addition, travel companies and Hue hotel must satellite service for large enterprises should share profits For example, the tour operator cannot afford to organize a package tour but only accept a part of the tour 2.4 The existing capital structure of the TTCs Hue Through the survey of the TTCs Hue enterprises, some problems exist capital structure as follows: Firstly, the owner is the principal decision maker in the capital structure because most of the medium and small sized enterprises are also the owners of the enterprise 49% of enterprises use equity and 33% use debt, indicating that the business does not follow the classification theory The situation shows that the average financial performance of Hue Enterprises is very low so the retained earnings are not enough to finance new investment, so the enterprise must use other resources For financing options as equity, management believes that the advantage is that the enterprise guarantees financial autonomy and is not under pressure to repay The advantage of using a loan is the low cost of capital, the benefit of the tax shield, the sharing of control over the business and the increase in return on equity Thus, managers can understand the advantages and disadvantages of each source of funding so the rate of using equity is much higher than debt Second, for the optimal capital structure or capital structure, the business owner is based on actual experience to decide In practice and empirical research in Vietnam, there are few works on optimal capital structure Therefore, it is difficult for enterprise owners to set reasonable debt levels for enterprises The debt-to-equity ratio was less than 50%, equivalent to 33.33% of total debt The management also believes that the target capital structure needs to be developed because of the advantages of financial risk mitigation and low cost of capital Third, the correlation between capital structure and financial performance is very clear when 76.81% of business executives think that the financial efficiency factor has an impact on capital structure and factors The executive's capacity is only 36.23% of the choice 2.5 Analyzing the impact of factors affecting the financial efficiency of Hue Enterprises 2.5.1 Research data The research data includes 170 enterprises in the field of tourism services with clear financial data from 2013 to 2016 The classification of enterprises in the tourism sector is carried out by the Taxation Department of Thua Thien Hue Province The author examines the field of activity After eliminating enterprises with different data and failing to meet the research data standards, the number of enterprises selected for the study was 144 2.5.2 Model estimation methods Topics used data analysis techniques table data with the model as follows: Yit = C + With i, t X1it + β2X2it + …+ βnXnit + uit N* In which: Yit is dependent variable with i: entity (ENTERPRISE), and t is the time (year) X1it,…, Xnit is the value of the independent variable representing the factors that affect the capital structure of the firm i at period t Uit is the remainder The dissertation uses methods of running OLS, FEM, REM, GLS, and GMM models, and then compares the results of the models to the most appropriate model 2.5.3 Mơ hình kiểm định The thesis gives a general model of the impact of capital structure and other factors on financial performance as follows: The dissertation uses the ROA and ROE variables as a measure of financial performance The six independent variables are: Total Debt to Total Assets (DA), Long-Term Asset (TSDH), Enterprise Size (SIZE), growth rate (GROW), UNI (corporate property) and GDP (GDP) Model 1: ROEit = C0 + β1DAit +β2TSDHit + β3SIZEit + β4GROWit + β5UNIit + β6GDP it + uit (2.1) 10 The positive correlation coefficient r shows the positive relationship between the dependent variable and the independent variable In contrast, if negative, it implies the opposite relationship between the dependent variable and the independent variable Positive relationship with ROA and ROE: asset growth and GDP Reverse-ROA and ROE: Debt ratio, asset structure, enterprise size, and business characteristics Check the multi-collinear phenomenon In order to detect multi-collinearity in the model, the author uses the Variance Inflation Factor (VIF) There are many different proposals for the value of VIF, but the most common is 5, whereby the maximum level of VIF that exceeds that value can cause multi-collinearity (Rogerson, 2001) Looking at the regression coefficient of the model, the VIF of the variables F 0.0000 0.0000 0.0000 MODEL SELECTION CHOICE F-test 0.0000 Hausman test 0.0079 CHECKS FOR DISABILITY MODELS Prob>chi2=0.0000: There is variation in the Variability phenomenon of variance Prob>F=0.0000: There is a self-correlation Self-correlation phenomenon GMM Test 0.712 AR2 0.072 Hansen test (*, **, ***: significant at 10%, 5%, 1%) Source: calculation results of authors under STATA 12.0 program Table 2.11 Endogenous test results with dependent variable ROE 16 Variables P_Value Endogenous phenomena DA 0.0047 There are endogenous phenomena UNI 0.1318 There is no endogenous phenomenon TSDH 0.3111 There is no endogenous phenomenon GROW 0.2981 There is no endogenous phenomenon SIZE 0.0453 There are endogenous phenomena GDP 0.7433 There is no endogenous phenomenon Note: Verify Durbin - Wu - Hausman (P_value), significance level to reject or accept hypothesis Ho: variable tool is exogenous is 5% Bảng 2.12 Kết hồi quy mơ hình biến phụ thuộc ROA Mơ hình Biến DA GLS GMM OLS FEM REM -0.0314 -0.1937 -0.0314 -0.1501 -0.0899 (0.014)** (0.000)*** (0.015)** (0.000)*** (0.000)*** -0.0070 -0.0102 -0.0070 -0.0345 -0.0297 UNI (0.498) (0.492) (0.004)*** (0.006)*** (0.067)* -0.0636 -0.0540 -0.0636 -0.0325 -0.0534 TSDH (0.000)*** (0.000)*** (0.0000)*** (0.077)** (0.000)*** -0.0095 0.0169 -0.0095 0.0981 0.0075 SIZE (0.047)** (0.001)*** (0.049)** (0.000)*** (0.325) 0.0380 0.0334 0.0380 0.0099 0.0210 GROW (0.000)*** (0.080)* (0.0000)*** (0.0000)*** (0.0000)*** 1.3168 1.4046 GDP 1.3168 1.1754 1.3544 (0.024)** (0.000)*** (0.026)** (0.000)** (0.000)*** -0.0397 0.0472 -0.1019 0.0472 -0.6073 CONS (0.424) (0.300) (0.005)*** (0.304) (0.000)*** 576 576 N 576 576 576 R-Square 0.2451 0.1948 0.1360 Prob>F 0.0000 0.0000 0.0000 MODEL SELECTION CHOICE F-test 0.0000 Hausman test 0.0000 KIỂM ĐỊNH KHUYẾT TẬT MƠ HÌNH Phương sai thay đổi Prob>chi2=0.0000: Có tượng phương sai thay đổi Tự tương quan Prob>F=0.0006: Có tượng tự tương quan GMM TEST 0.222 AR2 17 0.750 Hansen test (*, **, ***: significant at 10%, 5%, 1%) Source: calculation results of authors under STATA 12.0 program Table 2.13 Endogenous test results with ROA dependent variables Variables P_Value Endogenous phenomena DA 0.0000 There are endogenous phenomena UNI 0.5972 There is no endogenous phenomenon TSDH 0.8908 There is no endogenous phenomenon GROW 0.0556 There is no endogenous phenomenon SIZE 0.0482 There are endogenous phenomena GDP 0.5463 There is no endogenous phenomenon Note: Verify Durbin - Wu - Hausman (P_value), significance level to reject or accept hypothesis Ho: variable tool is exogenous is 5% From Table 2.10, 2.11, 2.12 and 2.13, OLS, FEM, REM, GLS, GMM and model selection tests The following results: - Based on the results of F test, there are: For both models give value Prob> F = 0.0000 F = 0.0079 chi2 = 0.0000 z) 0.140 0.463 Sargan test 0.000 0.247 (*, **, ***: significant at 10%, 5%, 1%) Source: calculation results of authors under STATA 12.0 program Table 2.17 Regression results by threshold 23 Threshold Varibales DA 0%-