BANKING ACADEMY FINANCE FACULTY GRADUATION THESIS TOPIC: FACTORS AFFECTING BUSINESS PERFORMANCE OF CONSTRUCTION MATERIAL COMPANIES ON VIETNAM STOCK MARKET Student name: Hoang Thi Ngoc Anh Class : K23CLC- TCB Course : 2020-2024 Student ID : 23A4010017 Advisor : MSc. Tran Anh Tuan Hanoi, April 2024 BANKING ACADEMY FINANCE FACULTY GRADUATION THESIS TOPIC: FACTORS AFFECTING BUSINESS PERFORMANCE OF CONSTRUCTION MATERIAL COMPANIES ON VIETNAM STOCK MARKET Student name: Hoang Thi Ngoc Anh Class : K23CLC- TCB Course : 2020-2024 Student ID : 23A4010017 Advisor : MSc. Tran Anh Tuan Hanoi, April 2024 2 DECLARATION I hereby declare that the graduation thesis with the topic “Factors affecting the business performance of construction material companies on the Vietnam Stock Market" is my research work, with the support of my supervisor MSc. Tran Anh Tuan.
The data and results in the thesis are honest and have never been published in any other works. I will be responsible for the content I have presented in this thesis. Hanoi, 1st May 2024 Hoang Thi Ngoc Anh i ACKNOWLEDGEMENT First of all, I would like to sincerely thank for lecturers and tutors in the Finance Faculty of the advanced program at Banking Academy, who have dedicated teaching and imparted knowledge, and valuable experience during my school years. I would like to express a special gratitude to MSc.
Tran Anh Tuan, for his valuable guidance, encouragement, correction, and detailed comments from the preparation to the completion of this study. Lastly, I want to thank my family and friends for all their encouragement and intellectual support that has made this report possible. Hanoi, 1st May 2024 Hoang Thi Ngoc Anh ii TABLE OF CONTENTS DECLARATION .v LIST OF FIGURES AND TABLES. Aims and objectives.
Research subjects and scope .2 CHAPTER I: LITERATURE REVIEW. Theoretical basis of business performance. Definition of business performance. Theories related to business performance.
Indicators of business performance. Novelty of the research.17 CHAPTER 2: DATA AND RESEARCH METHODOLOGY. Select suitable models. Test defect detection and build the final model .28 CHAPTER 3: RESEARCH MODEL AND RESULTS.
Research model and hypothesis. Descriptive statistics of the variables in the models. Pearson’s correlation test. Factors influence on ROA.
Factors influence on ROE. Model selection tests. Check defects in the model. Research results and discussions .49 CHAPTER 4: CONCLUSIONS, POLICY RECOMMENDATIONS AND LIMITATIONS.
Limitations of topic.65 iv ABBREVIATION Abbreviation Completed Scripts GLS Generalized Least Squares OLS Ordinary Least Square FEM Fixed Effects Model REM Random Effects Model ROA Return on Assets ROE Return on Equity AGE Firm age SIZE Firm size LEV Financial Leverage LIQ Liquidity AST Fixed Asset Structure AT Asset Turnover REV Revenue Growth GDP Gross Domestic Product INF Inflation rate v LIST OF FIGURES AND TABLES Figure and Table Page Figure 2. Factors Affecting Business Performance 21 Table 2. Summary of researched firms 22 Table 3. Summary of variables in the model 37 Table 3.
Descriptive statistics of the variables 39 Table 3. Matrix correlation 42 Table 3. Variance inflation factor (VIF) 42 Table 3. Regression results with ROA 43 Table 3.
Regression results with ROE 44 Table 3. Selection tests for model 1 (ROA) 46 Table 3. Selection tests for model 2 (ROE) 46 Table 3. Wooldridge test for Autocorrelation Test 48 Table 3.
Summary of GLS regression results of two models 49 Table 3. Summary of model results and expectations of model 1 50 Table 3. Summary of model results and expectations of model 2 50 vi INTRODUCTION 1. Rationale For Vietnam's developing economy, the construction material industry plays an important position in the national economy, strongly attracting investment capital flows and promoting the development and expansion of the market.
In all fields of construction material production, there are several positive changes. Production lines with outdated technology, low productivity, raw materials and fuel consumption, low efficiency, and environmental pollution are gradually eliminated. Newly invested factories apply advanced technology and modern equipment, many lines are equipped with high levels of mechanization and automation, and the technology level is on par with developed countries around the world. Construction material development has gradually received more attention towards sustainable development and environmental protection.
Construction material is typically an industry that requires large capital and long project construction periods as well as project scale, which requires managers to come up with plans for issues such as managing capital and costs or increasing business competitiveness. In the current context of a fiercely competitive market, in any industry, there are certain difficulties; thus, to avoid risks, businesses need to set operational goals, which is to maximize the value of firm assets. Improving business performance is not only important for businesses but also crucial for our society as a whole. However, how to effectively utilize capital as well as other resources to achieve goals is difficult for business managers.
Businesses need to have reasonable policies and strategies to be able to develop well and sustainably when affected by changes in endogenous and macro factors. Through the process of studying and researching at the Banking Academy, the author realized that improving the business efficiency of construction material companies is utterly essential. In addition, to have effective solutions to enhance business performance, it is necessary to analyze the influencing factors, so the author chose to research the topic “Factors affecting the business performance of construction material companies on Vietnam Stock Market”. Aims and objectives The research conducts theoretical research on business performance and factors affecting the performance of businesses in the construction materials industry on the Vietnam Stock Market in the period 2014 to 2023.
Since then, analyzing practical data research results as a basis to help administrators evaluate, improve, and enhance business performance. Research subjects and scope The subjects of the topic are construction material businesses on the Vietnam Stock Market. - Spatial range: The author chose to study a sample of 63 businesses manufacturing and selling construction materials listed on both HOSE and HNX exchanges along with companies traded in UpCom. - Time range: The author researched over a period of ten years, from 2014 to 2023.
Research methodology In this research, the author synthesizes, compiles statistics, and analyzes data. Based on modeling methods of analyzing quantitative data, the author builds hypotheses and uses multivariate linear regression models to find results. From there, recommendations are made for individuals and organizations managing or participating in construction materials businesses in Vietnam. Study structure The study is divided into four main chapters: Chapter 1: Literature Review Chapter 2: Data and Research Methodology Chapter 3: Research Model and Results Chapter 4: Conclusions, Policy Recommendations and Limitations 2 CHAPTER I: LITERATURE REVIEW 1.
Theoretical basis of business performance 1. Definition of business performance Business activities include any activity a company engages in for the primary purpose of making a profit. This is a general term that encompasses all the economic activities carried out by an enterprise during business. Business activities, including operating, investing, and financing activities, are ongoing and focus on creating value for shareholders.
Companies must build their business plans and suggest practical solutions to market fluctuations. In the process of making their plans, the businesses cannot but calculate economic benefits from those activities or in other words, the business efficiency. The term efficiency can be defined as the ability to achieve an end goal with little to no waste, effort, or energy. In manufacturing, it can be described as productivity, while in business, efficiency is possibly reflected through profits or competitiveness of companies.
Measuring firm performance is an essential part of the effective business management of every enterprise (Demirbag et al. Performance assessment can provide valuable information that allows managers to track performance, and report progress, thereby accurately determining and improving the situation (Wagoner et al. There have been different varieties of opinions about the business efficiency of a firm so far. For example, Adam Smith, a famous British economist considered as the father of modern economics, stated that efficiency was the outcomes achieved in economic activities or the revenue from the consumption of goods.
This perspective focuses on output results and ignores input factors, so evaluating the performance of a business following this point of view will not reflect the costs the business has spent to obtain the output results. (1986) contended that a business’s performance depended on its ability to create value for its partners. However, he did not point out which specific values were here and whether they were only partners who were interested in raising business values. 3 Manfred Kuhn (1990) also gave an opinion that efficiency was possibly determined by dividing the results calculated following value units by firm costs.
This is an improved view of Adam Smith's. With this perspective, Manfred Kuhn indicated the relationship between costs and results or inputs and outputs. This is also the viewpoint that many economists and business administrators apply in practice to calculate economic efficiency. Accordingly, the formula to compute firm efficiency will be: 𝑂𝑢𝑡𝑐𝑜𝑚𝑒𝑠 𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑒𝑓𝑓𝑖𝑐𝑖𝑒𝑛𝑐𝑦 = 𝑇𝑜𝑡𝑎𝑙 𝑐𝑜𝑠𝑡𝑠 Neely, G., and Platts (1995) argued that performance assessment was the process of quantifying the efficiency and effectiveness of action.
Research by Siminica M. (2008) reinforced that an efficient business could maximize its time to generate profits. A business with good performance can simultaneously achieve both productivity and great results. In other words, the performance of a firm is a function of two variables: productivity and operating results.
While productivity reflects the relative level to the external environment, performance measures the achievement of operating activities within the enterprise.” According to Nguyen Khac Minh (2004), "efficiency" in economics is defined as the correlation between the input of scarce factors and the output of goods and services. The concept of efficiency is used to consider how well markets distribute resources. Thus, efficiency can be understood as the degree of success that corporations attain in the allocation of usable inputs and the outputs they produce to meet a certain goal. The goal of producers can be simply to try to avoid waste, either by achieving maximum output from limited inputs or by minimizing input utilized in the production of given outputs.
In this case, the concept of efficiency corresponds to what we call technical efficiency, the ability to minimize the use of inputs to produce a given output vector, and the manufacturer's goal of avoiding waste becomes the goal of achieving a high level of technical efficiency. (2009) showed a fairly complete view that business performance was a broad and diverse concept, which was assessed through growth, productivity, profit, or competitiveness. According to Mutende and colleagues (2017), business performance refers to the capability of a business to achieve output results compared to the set financial plan. Based on the above viewpoints, we can conclude that company performance is a measurement of the quality of business activities, reflecting the ability of businesses to use resources to achieve set goals.
This is expressed through the correlation between the results achieved and the costs spent to gain those results. The larger the difference is, the more effectively the business operates. From the above perspective, we can calculate absolute and relative business performance through the following formulas: Absolute Value: Efficiency = Outputs – Inputs With this formula, the efficiency here can be computed in specific numbers, which can be usually net profit as regards business. This formula measures the efficiency of a business through the value of revenue received after eliminating all costs.
However, in reality, comparing profits among enterprises cannot thoroughly reflect their operating efficiency because profits do not infer the business's capacity to use the resources. For example, two businesses generate the same profit, but the company spending half of the capital to achieve that profit will be better than a business investing all the capital to achieve that same result. 𝑂𝑢𝑡𝑝𝑢𝑡𝑠 Relative Value: Efficiency = (1) 𝐼𝑛𝑝𝑢𝑡𝑠 This formula shows how many units of output will be produced by each unit of input, reflecting the efficiency of resource use.