Logo PTI Logo icrmat

Proceedings of the 2021 International Conference on Research in Management & Technovation

Annals of Computer Science and Information Systems, Volume 28

Impact of Financial Risk on Business Efficiency Listed on The Stock Market in Vietnam

, , ,

DOI: http://dx.doi.org/10.15439/2021KM41

Citation: Proceedings of the 2021 International Conference on Research in Management & Technovation, Vu Dinh Khoa, Shivani Agarwal, Gloria Jeanette Rincon Aponte, Nguyen Thi Hong Nga, Vijender Kumar Solanki, Ewa Ziemba (eds). ACSIS, Vol. 28, pages 243247 ()

Full text

Abstract. This study aims to evaluate the influence of financial risk on the business efficiency of listed companies in Vietnam's stock market. To carry out the research objective, the authors use the short-run solvency, net working capital, and financial risk criteria proposed by Bathory (1984). At the same time, the authors conducted a quantitative analysis using a two-step GMM model, based on panel data collected from financial statements and financial statements of 430 companies listed on the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange in the period 2012-2018. The research results show that the business efficiency of enterprises through return on assets and return on equity is positively affected by net working capital and financial risk and is negatively impacted by short-run solvency. This result also has some implications for improving business efficiency and financial risk management of listed companies on the Vietnam stock market


  1. Arif, A. S., A. (2015). Relationship between financial risk and financial performance: An Insight of Indian Insurance Industry. International Journal of Science and Research, 4(11), 1424–1433. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3553374
  2. Auronen, L. (2003). Asymmetric Information: Theory and Applications. Seminar of Strategy and International Business, 116, 45–56. Retrieved from https://citeseerx.ist.psu.edu/viewdoc/download?doi=
  3. Awunyo, D. & Badu, J. (2012). Capital Structure and Performance of Listed Banks in Ghana, Global Journal of Human Social Science, 12(5), 3-7
  4. Bansal, A., Kaufmann, R., Mark, R., and Peters. E. (1992). Financial Risk and Financial Risk Management Technology: Issues and Advantages. Working Papers Series, New York, New York University, 1(3), 27 - 34. Retrieved from https://www.managementjournal.info/index.php/IJAME/article/view/173/166
  5. Bathory, A. (1984). Predicting Corporate Collapse: Credit Analysis in the Determination and Forecasting of Insolvent Companies. London, UK: Financial Times Business Information: London, UK: Financial Times Business Information.
  6. Berger, A. N., and R. DeYoung. (1997). Problem Loans and Cost Efficiency in Commercial Banks. Journal of Banking and Finance, 21, 849-870. https://doi.org/10.1016/S0378-4266(97)00003-4
  7. Berger, A. N. D. P. (2002). Capital Structure and Firm Performance: A New Approach to Testing Agency Theory and an Application to the Banking Industry. Feds Paper. http://dx.doi.org/10.1016/j.jbankfin.2005.05.015
  8. Bhunia A., Mukhuti S., 2012. Financial risk measurement of small and medium-sized companies listed in Bombay Stock Exchange. International Journal of Advances in Management and Economics, 1(3), 27-34. Retrieved from https://www.managementjournal.info /index.php/IJAME/article/view/173/166
  9. Brigham, E.F. & Houston, J.F. (2009). Fundamentals of Financial Management (Eleventh Edition). University of Florida, Thomson South-Western, 415-456.
  10. Celli, M. (2015). Can Z-Score Model Predict Listed Companies’ Failures in Italy? An Empirical Test. International Journal of Business and Management, 10(3). http://dx.doi.org/10.5539/ijbm.v10n3p57
  11. Dandago, K. I. B., B.U. (2014). The Use of Multi-discriminant Analysis for the Prediction of Corporate Bankruptcy in Malaysian Textile Industry. Journal of Business and Economics, 5(6), 813-822. http://dx.doi.org/10.15341/jbe (2155-7950)/06.05.2014/006
  12. Dang T.H., P. T. D., Nguyen T.H., Hoang T.H. (2020). Determinants of Share Prices of Lited Companies Operating in the Steel Industry: An Empirical Case from Vietnam. The Journal of Asian Finance, Economics and Business, 7(12), 131-138. http://dx.doi.org/10.13106/jafeb.2020.vol7.no12.131
  13. Dasouqi. A. Q, K. A. K. a. (2017). Sales nationality and debt financing impact on firm’s performance and risk Evidence from Jordanian companies. Euro Med Journal of business, 12(1), 103-126. https://doi.org/10.1108/EMJB-05-2016-0015
  14. Dey, R. K., Hossain, S.Z., and Rezaee, Z. (2018). Financial Risk Disclosure and Financial Attributes among Publicly Traded Manufacturing Companies: Evidence from Bangladesh. Journal of Risk and Financial Management, 11(3), 50. https://doi.org/10.3390/jrfm11030050
  15. Fali, I., Nyor, T., Mustapha, L. (2020). Financial Risk and Financial Performance of listed Insurance Companies in Nigeria. European Journal of Business and Management, 12(12), 143–153. http://dx.doi.org/10.7176/EJBM/12-12-13
  16. Harvey, J. (2008). Financial Risk Management, 47th ed. London: The Chartered Institute of Management Accountants.
  17. Holton, G. A. (2004). Defining risk. Financial Analysts Journal, 60, 19–25. doi.org/10.2469/faj.v60.n6.2669
  18. Houston, B. (2009). Fundamentals of Financial Management (Eleventh Edition). University of Florida: Thomson South-Western.
  19. Jensen, M. C., William, H., and Meckling, W.H. (1976). Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, 305–360. http://dx.doi.org/10.1016/0304-405X(76)90026-X
  20. Khasawneh, A. K & Dasouqi, A. Q. (2017). Sales nationlity and debt financing impact on firm’s performance and risk Evidence from Jordanian companies’, EuroMed Journal of business, 12(1), 103-126.
  21. Khurshid, M. R. (2013). Determinants of financial distress evidence from KSE 100 index. Research Journal of the Institute of Business administration Karachi, 8(1), 7-19. Retrieved from https://ir.iba.edu.pk/businessreview/vol8/iss1/2/
  22. Kinyua, J. K., Gakure, R., Gekara, M. and Orwa, G. (2015). Effect of Risk Management on The Financial Performance Of Companies Quoted In The Nairobi Securities Exchange. International Journal of Business & Law Research, 3, 26–42. Retrieved from https://www.academia.edu/33959612/Effect_Of_Risk_Management_On_The_Financial_Performance_Of_Companies_Quoted_In_The_Nairobi_Securities_Exchange
  23. Kociu, L., Mano, R., & Armand, H. (2015). Financial Risk Assessment of Albanian SMEs with the Help of Financial Ratios. European Scientific Journal, 11(4), 309-321. Retrieved from https://core.ac.uk/download/pdf/328024798.pdf
  24. Li, S. (2003). Future trends and challenges of financial risk management in the digital economy. Managerial Finance, 29(5/6), 111-125. http://dx.doi.org/10.1108/03074350310768797
  25. Masnoon, M., and Saeed, A. (2014). Capital Structure Determinants of KSE Listed Automobile Companies. European Scientific Journal, 10(13), 451–461. Retrieved from https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2444698
  26. Mugozhi, F. (2016). An assessment of the application and the corporate failure predictive value of Altman’s Z score model in Zimbabwe. Journal on Business Review, 4(4), 66-74. https://doi.org/10.5176/2010-4804_4.4.398
  27. Modigliani, F. & Miller, M. H. (1958), /The cost of capital, Coporation finance and the theory of investment, The American Economic Review, 48(3), 261-297.
  28. Onsongo S. K., M. S. M. A., Mwangi L.W. (2020). Financial Risk and Financial Performance: Evidence and Insights from Commercial and Services Listed Companies in Nairobi Securities Exchange, Kenya. International Journal of Financial Studies, 8(51). http://dx.doi.org/10.3390/ijfs8030051
  29. Saeed, M., Gull, A. & Rasheed, M. (2013). Impact of Capital Structure on Banking Performance (A Case Study of Pakistan). Interdiscilinary Journal of Contemporary Research in Business, 4(10), 5-10
  30. Sharifi, O. (2014). Financial Risk Management for Small and Medium Sized Enterprises. International Journal of Information. Business and Management, 6, 82-89. Retrieved from https://www.proquest.com/openview/cfaa3f3a850e176b17f7901b8bc770f2/1?pq-origsite=gscholar&cbl=2032142
  31. Simantinee S., K. T. V. V. (2015). Factors Influencing Financial Risk-A Case Study of NSE NIFTY Companies. International Journal in Management & Social Science, 3(8), 132-137. Retrieved from https://euroasiapub.org/wp-content/uploads/2016/11/6FMApril-2077-1.pdf
  32. Spence, M. (2002). Signaling in retrospect and the informational structure of markets. American Economic Review, 92, 434–459. Retrieved from https://www.jstor.org/stable/3083350
  33. Steven, L. (2003). Future trends and challenges of financial risk management in the digital economy. Managerial Finance, 29(6), 111–125. http://dx.doi.org/10.1108/03074350310768797
  34. Venkatraman. N, a. V. R. (1986). Measurement of Business Performance in Strategy Research: A Comparison of Approaches. Academy of Management Review, 11(4), 801-814. http://dx.doi.org/10.5465/AMR.1986.4283976
  35. Wangalwa, M. a. M., W. (2018). Effect of Financial Risk on Financial Performance of Large-Scale Supermarkets in Nairobi County, Kenya. International Journal of Social Science and Technology, 4, 574–591. Retrieved from https://www.ijssit.com/main/wp-content/uploads/2018/10/Effect-Of-Financial-Risk-On-Financial-Performance-Of-Large-Scale-Supermarkets-In-Nairobi.pdf
  36. Woods, M., and Dowd, K. (2008). Financial Risk Management for Management Accountants: Oxford: Elsevier.