BANKING ACADEMY ADVANCED PROGRAM FACULTY OF FINANCE GRADUATION THESIS FACTORS AFFECTING FINANCIAL PERFORMANCE OF INFORMATION TECHNOLOGY ENTERPRISES LISTED ON THE VIETNAM STOCK EXCHANGE Supervisor : PhD. Tran Thi Thu Huong Class : K23CLC - TCB Student : Nguyen Thi Phuong Thao Student ID : 23A4050332 Hanoi, May, 2024 0 DECLARATION I hereby declare that this is my own research project, with support from my instructor, Dr. Tran Thi Thu Huong. The research content and results in this topic are honest and have never been published in any previous research work.
The data in the tables for analysis, comments, and evaluation were collected by the author from various sources listed in the reference section. If any fraud is discovered, I will be fully responsible to the Council as well as the results of my thesis. Student Thao Nguyen Thi Phuong Thảo I DEDICATION First of all, I would like to send my sincere thanks to all the teachers at the Banking Academy in general and the teachers in the Department of Finance in particular for always being enthusiastic and dedicated to teaching students useful knowledge and experience so that we can complete the bachelor's training program at the Banking Academy. Furthermore, the practical experiences imparted by the teachers during the classroom teaching process are useful lessons for me that I can apply during my internship and future work.
I would also like to send special thanks to Ms. Tran Thi Thu Huong, who directly guided and supported me during the process of writing my graduation thesis. Thanks to her dedicated guidance, I was able to complete my thesis in the most complete way. Thank you sincerely! Student Thao Nguyen Thi Phuong Thao II TABLE OF CONTENTS CHAPTER 1: THEORETICAL BASIS FOR FACTORS AFFECTING FIRM’S FINANCIAL PERFORMANCE AND LITERATURE REVIEW………………4 1.
Overview of financial performance. Concept of efficiency (performance) and financial performance. Financial performance measures. Factors affecting financial performance.
Firm’s growth rate. Firm’s operation year. Literature review: factors affecting financial performances. Studies about firm’s financial performance.
Studies about Information and Technology firms. Studies about factors affecting firms’ financial performance. Studies about firm’s financial performance. Studies about Information and Technology firms.
Studies about factors affecting firms’ financial performance. RESEARCH METHOD AND MODEL. Research variables and hypotheses.27 CHAPTER 3: ASSESSING FACTORS AFFECTING FINANCIAL PERFORMANCE OF INFORMATION AND TECHNOLOGY ENTERPRISES IN VIETNAM IN THE PERIOD 2017-2022. Current status of financial performance of IT enterprises in Vietnam.
Overview of the IT industry in Vietnam. Current status of financial performance of IT enterprises in Vietnam in the period 2017-2022. Model to evaluate factors affecting financial performance of Information and Technology enterprises in Vietnam in the period 2017-2022. Analyze correlation of variables in the model.
Check for multicollinearity. Discuss the results of the model.53 CHAPTER 4: CONCLUSION AND RECOMMENDATIONS. Recommendations for businesses, government and further researches. Recommendations for businesses.
Recommendations for the government. Recommendations for further researches.65 V LIST OF ABBREVIATIONS ICT Electronics - information technology - communications industry IT Information and Technology ROA Return on assets ROE Return on equity ROS Return on sales VI LIST OF TABLES 1. Tables Table 1: Some studies on financial performance Table 2: Some studies on company size Table 3: Description of variables in the analysis Table 4: Expected signs of variables in the model Table 5: Statistics describe the variables used in the model Table 6: Correlation between variables in the model Table 7: Multicollinearity results Table 8: Regression model results: ROA Table 9: Regression model results: ROE Table 10: Regression model results: ROS Table 11: F-test result Table 12: Hausman test result Table 13: REM model result Table 14: Heteroscedasticity test Table 15: Autocorrelation test Table 16: GLS model result Table 17: GLS model result and expectation Table 18: List of Information Technology enterprises listed on the stock exchange in Vietnam (2024) 2. Pictures VII Picture 1: Implementation steps of quantitative method Picture 2: Proposed model Picture 3: Comparision between growth rate of GDP and ICT industry Picture 4: Number of ICT firms 2017-2023 Picture 5: Chart comparing innovation capacity and information security level of ASEAN countries Picture 6: Lack of human resources in IT industry Picture 7: ICT industry revenue and growth Picture 8: ROA – ROE – ROS of information and technology firms in vietnam (2017- 2022) VIII INTRODUCTION 1.
Rationale To survive and develop, businesses always need to improve the efficiency of their business operations. Researching factors affecting firm financial performance is crucial due to its direct impact on the sustainability and competitiveness of businesses. Understanding these factors allows firms to make informed strategic decisions, allocate resources effectively, and mitigate risks. By identifying key drivers of financial performance, businesses can optimize their operations, enhance profitability, and maintain investor confidence.
Moreover, in a dynamic and competitive business environment, continuous research helps firms stay adaptive and responsive to changing market conditions, regulatory requirements, and technological advancements. Ultimately, the urgency of researching factors affecting firm financial performance lies in its potential to drive long-term growth, resilience, and value creation for stakeholders. In the digital era, the information technology (IT) industry has become a key industry, guiding the development of each country. Even during the extremely difficult time of the Covid-19 pandemic, IT in the world and in Vietnam has made great breakthroughs.
During the outbreak of the pandemic, in-person learning and working conditions were extremely limited, online working and learning methods have become an inevitable trend. Since then, IT has further affirmed its leading position, meeting the transformation needs of all other professions in difficult times. In Vietnam, promoting the development of IT is one of the top goals. How to promote growth in the IT industry is indeed an urgent issue that needs attention and development.
However, numerous challenges and opportunities have emerged during this period, for instant economic growth, globalization, technological advancements, 1 policy and regulatory environment, infrastructure and connectivity, human capital and talent acquisition, and especially the fierce competition of businesses in the industry. These challenges and opportunities require a comprehensive understanding of the factors affecting IT enterprise performance. Given the dynamic nature of the IT industry and the rapidly evolving business environment in Vietnam, understanding the factors affecting the performance of IT enterprises is crucial for policymakers, industry stakeholders, and investors. Addressing these factors effectively can unlock the full potential of the IT industry, drive sustainable growth, and enhance Vietnam's position in the global digital economy.
Stemming from the importance and necessity of understanding the factors that affect financial performance, the author chose the topic “Factors affecting financial performance of Information Technology enterprises listed on the Vietnam stock exchange” for research. Aims of the thesis General goal: Study factors affecting financial performance of Information and Technology firms Specific goals: Based on the theoretical basis, using research methods and inheritance from previous studies, generalize and describe the factors affecting the financial performance of enterprises in the Information Technology industry in Vietnam, thereby offering a number of solutions to improve financial efficiency of enterprises in the Information Technology industry 3. Subject and scope of the thesis Research subject Factors affecting financial performance of Information Technology companies listed on the Vietnam stock market. Research scope 2 Time scope: Within 6 years, from 2017 to 2022 Spatial scope: 28 Information Technology companies listed on the Vietnam stock market.
Research methods The research method includes collecting data from financial reports of businesses in the period 2017 - 2022. The research was conducted using a quantitative method, through statistical methods such as descriptive statistics and modeling to determine the relationship between variables. Moreover, the author uses appropriate research methods such as multivariate regression analysis, and other methods to draw appropriate conclusions and recommendations. Structure of the thesis The thesis is divided into 4 chapters as follows: Chapter I: Theoretical basis for firm performance and factors affecting financial performance Chapter II: Research method and model Chapter III: Assessing factors affecting business performance of IT enterprises in Vietnam in the period 2017-2022 Chapter IV: Conclusion and recommendations 3 CHAPTER 1: THEORETICAL BASIS FOR FACTORS AFFECTING FIRM’S FINANCIAL PERFORMANCE AND LITERATURE REVIEW 1.
Overview of financial performance 1. Concept of efficiency (performance) and financial performance 1. The concept of efficiency Efficiency is the desired result, which produces the results that people expect and aim for; it has different content in different areas. In manufacturing, efficiency means efficiency and productivity.
In business, efficiency is interest rate and profit. In labor in general, efficiency is labor productivity, evaluated by the amount of time spent producing a unit of product, or by the number of products produced in a unit of time (Pham, 2022). The concept of financial performance First of all, the essence of financial performance is the business performance of an enterprise. Business efficiency of an enterprise is a comprehensive economic indicator that reflects the level of use of factors in the production process.
Business efficiency also demonstrates the skillful application of business managers between theory and reality to maximize the exploitation of factors in the production process such as machinery, equipment, raw materials, and labor. to increase profits. So business efficiency is an aggregate economic expenditure that reflects the level of use of physical resources; business finances to achieve the highest efficiency. The essence of financial performance is the comparison between output results and input factors of a business in a certain period, depending on the requirements of business administrators.
If H is called financial efficiency (business efficiency), then H is expressed according to the following mathematical formula: 4 𝑶𝒖𝒕𝒑𝒖𝒕 𝒓𝒆𝒔𝒖𝒍𝒕 H= 𝑰𝒏𝒑𝒖𝒕𝒔 The above formula reflects how many units of output such as revenue and profit are created for each unit of input costs (capital, labor, raw materials, machinery and equipment. In a business period, the higher this indicator, the better the financial performance of the business. In this thesis topic, the author will present previous research on metrics to measure financial performance, thereby stating the metrics that will be used in the research and analysis process. Below are some studies on measuring the financial performance of businesses.
Financial performance measures Table 1: Some studies on financial performance Measure Study Dividend yield (DY) Ming et al. (2008) Ongore (2011) Return on assets (ROA) Hu et al. (2008) Return on equity (ROE) Hu et al. (2008) Return on sales (ROS) Le et al.
(2011) Jenkins et al. (2011) Return on investment (ROI) Shah et al. (2011) 5 Market value coefficient (Marris Tian et al. (2008) and Tobin’s Q) (Source: Author compiled from previous studies) First of all, which metrics to use to evaluate corporate financial performance plays a very important role.
There are many indicators to measure corporate financial performance, but the most commonly used indicators in research can be divided into two main categories: accounting value coefficients, also known as coefficients. on profits and market value coefficients, also known as asset growth coefficients. According to Hu et al. In addition, two studies by Ming et al.
(2008) and Ongore (2011) also use the dividend yield index (DY), the study by Le et al. (2011) uses the ratio of profit on revenue (ROS), or Shah et al. (2011), they used the ratio of return on investment (ROI) to measure the financial performance of businesses. For the market value coefficient group, according to research by Tian et al.
(2008), two coefficients Marris and Tobin's Q are also used to evaluate corporate financial performance. In which the Marris coefficient is calculated as the total market value of equity compared to the book value of equity, and the Tobin's Q coefficient is calculated as the market value of equity plus the book value of liabilities compared to book value of total assets. However, these coefficients only evaluate the effectiveness of State ownership capital, because it only directly reflects the level of growth in equity value in the enterprise capital structure. In general, ROS, ROA, ROE are the three most commonly used metrics in evaluating the financial performance of businesses.