Factors affecting the profitability of consumer goods enterprises: Study of enterprises listed on the Vietnam stock exchange
Main Article Content
Abstract
Consumer goods are one of the most potential and important markets of Vietnam. To further nurture the growth of this market, improving the firm profitability of consumer goods companies is essential. This research examines the influence of macroeconomic drivers and firm-specific aspects on profitability, proxied by ROA and ROE, of listed consumer goods companies in Vietnam. The study used POOL, FEM, REM, and GLS models to study 79 listed companies on HNX and HOSE from 2016 to 2020. The regression result showed that both macroeconomics and firm-specific factors have a significant impact on the profitability of studied firms. The macroeconomic factors are the GDP rate, interest rate, inflation rate, and exchange rate. The firm characteristics include firm size, leverage, and liquidity. Research’s implication is that firm managers and policymakers should consider both macroeconomics and firm-specific factors in their decision-making process, especially interest rate and financial ieverage
Article Details
Keywords
Consumer goods company, Firm characteristics, Macroeconomic factors, Profitability, Vietnamese listed company
References
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Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American political science review, 89(3), 634-647.
Bhayani, S. J. (2010). Determinant of profitability in Indian cement industry: An economic analysis. South Asian Journal of Management, 17(4), 6-20.
Blažková, I., & Dvouletý, O. (2018). Investigating the differences in entrepreneurial success through the firm-specific factors: Microeconomic evidence from the Czech food industry. Journal of Entrepreneurship in Emerging Economies, 11(2), 154-176.
Bodnar, G. M., & Gentry, W. M. (1993). Exchange rate exposure and industry characteristics: evidence from Canada, Japan, and the USA. Journal of International Money and Finance, 12(1), 29-45.
Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239-253.
Bui, H., Nguyen, D., Tran, D., Hoang, P., Pham, M., & Tran, M. (2020). Determinants influencing the profitability of listed food processing firms in Vietnam. Accounting, 6(4), 441-452.
Cassel, G. (1918). Abnormal deviations in international exchanges. The Economic Journal, 28(112), 413-415.
Chabachib, M., Hersugondo, H., Ardiana, E., & Pamungkas, I. D. (2020). Analysis of company characteristics of firm values: Profitability as intervening variables. International Journal of Financial Research, 11(1), 60-70.
Chen, K. Y., Elder, R. J., & Hsieh, Y.-M. (2007). Corporate governance and earnings management: The implications of corporate governance best-practice principles for Taiwanese listed companies. Journal of Contemporary Accounting & Economics, 3(2), 73-105.
Dioha, C., Mohammed, N. A., & Okpanachi, J. (2018). Effect of firm characteristics on profitability of listed consumer goods companies in Nigeria. Journal of Accounting, Finance and Auditing Studies, 4(2), 14-31.
Doğan, M. (2013). Does firm size affect the firm profitability? Evidence from Turkey. Research Journal of Finance and Accounting, 4(4), 53-59.
Egbunike, C. F., & Okerekeoti, C. U. (2018). Macroeconomic factors, firm characteristics and financial performance. Asian Journal of Accounting Research, 3(2), 142-168.
Fama, E. F., & Schwert, G. W. (1977). Asset returns and inflation. Journal of Financial Economics, 5(2), 115-146.
Ghazali, N. A. M. (2010). Ownership structure, corporate governance and corporate performance in Malaysia. International Journal of Commerce and Management, 20(2), 109-119.
Hall, M., & Weiss, L. (1967). Firm size and profitability. The Review of Economics and Statistics, 49(3), 319-331.
Hovakimian, A., Opler, T., & Titman, S. (2001). The debt-equity choice. Journal of Financial and Quantitative Analysis, 36(1), 1-24.
Hussain, I. (2015). Macro economy and profitability of insurance companies: a post crisis scenario in Pakistan. Pakistan Business Review, 17(2), 243-263.
Issah, M., & Antwi, S. (2017). Role of macroeconomic variables on firms’ performance: Evidence from the UK. Cogent Economics and Finance, 5(1), 1405581.
Izedonmi, P. F., & Abdullahi, I. B. (2011). The effects of macroeconomic factors on the Nigerian stock returns: A sectoral approach. Global Journal of Management and Business Research, 11(7), 25-29.
Kartiningsih, D., & Daryanto, W. M. (2020). The effect of firm characteristics to profitability of food and beverage companies listed in Indonesia stock exchange. International Journal of Business, Economics and Law, 22(1), 69-76.
Khatab, H., Masood, M., Zaman, K., Saleem, S., & Saeed, B. (2011). Corporate governance and firm performance: A case study of Karachi stock market. International Journal of Trade, Economics and Finance, 2(1), 39.
Kumar, K., Rajan, R., & Zingales, L. (1999). What Determines Firm Size? (No. 2211). CEPR Discussion Papers.
Le, T., Mai, V., & Nguyen, V. (2020). Determinants of profitability: Evidence from construction companies listed on Vietnam Securities Market. Management Science Letters, 10(3), 523-530.
Mahoney, J. T., & Pandian, J. R. (1992). The resource‐based view within the conversation of strategic management. Strategic Management Journal, 13(5), 363-380.
Majumdar, S. K. (1997). The impact of size and age on firm-level performance: some evidence from India. Review of Industrial Organization, 12(2), 231-241.
Malik, H. (2011). Determinants of insurance companies profitability: an analysis of insurance sector of Pakistan. Academic Research International, 1(3), 315-321.
Marsh, P. (1982). The choice between equity and debt: An empirical study. The Journal of Finance, 37(1), 121-144.
Mathur, S. S., & Kenyon, A. (1997). Creating value: shaping tomorrow's business: Butterworth-Heinemann.
McNamara, R., & Duncan, K. (1995). Firm performance and macro-economic variables: Bond University, School of Business.
Muchir, H. G. (2012). The impact of macroeconomic variables on the performance of the Nairobi securities exchange. University of Nairobi,
Mukras, M. S. (2015). Financial leverage and performance of listed firms in a frontier market: Panel evidence from Kenya, European Scientific Journal, 11(7), 534-550.
Mwangi, F. K. (2013). The effect of macroeconomic variables on financial performance of aviation industry in Kenya. University of Nairobi.
Myers, S. C. (1984). Capital Structure Puzzle (No. 1393). National Bureau of Economic Research, Inc.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
Nanda, S., & Panda, A. K. (2018). The determinants of corporate profitability: an investigation of Indian manufacturing firms. International Journal of Emerging Markets, 13(1), 66-86.
Nguyen, N. M., & Tran, K. T. (2021). Factors influencing business efficiency of steel firms: Evidence from Vietnam. The Journal of Asian Finance, Economics, and Business, 8(1), 295-304.
Novita, B. A., & Sofie, S. (2015). Pengaruh struktur modal dan likuiditas terhadap profitabilitas. Jurnal Akuntansi Trisakti, 2(1), 13-28.
Pervan, M., Pervan, I., & Ćurak, M. (2019). Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis. Economic Research-Ekonomska Istraživanja, 32(1), 968-981.
Romus, M., Anita, R., Abdillah, M. R., & Zakaria, N. B. (2020). Selected firms environmental variables: Macroeconomic variables, performance and dividend policy analysis. Paper presented at the IOP Conference Series: Earth and Environmental Science.
Saeed, M. M., Gull, A. A., & Rasheed, M. Y. (2013). Impact of capital structure on banking performance (A case study of Pakistan). Interdisciplinary Journal of Contemporary Research in Business, 4(10), 393-403.
Shyam-Sunder, L., & Myers, S. C. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics, 51(2), 219-244.
Steuart, J. (1767). An Inquiry Into the Principles of Political Economy (Vol. 1). A. Millar, and T. Cadell.
Stierwald, A. (2010). Determinants of Profitability: An Analysis of Large Australian Firms (No. wp2010n03). Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
Stiglitz, J., Stiglitz, J. E. S., & Greenwald, B. (2003). Towards a new paradigm in monetary economics: Cambridge University Press.
Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. The Journal of Finance, 43(1), 1-19.
Tổng cục Thống kê Việt Nam (2022). Thông Cáo Báo Chí Tình Hình Kinh Tế - Xã Hội quý III và 9 tháng năm 2022. https://www.gso.gov.vn/du-lieu-va-so-lieu-thong-ke/2022/09/thong-cao-bao-chi-tinh-hinh-kinh-te-xa-hoi-quy-iii-va-9-thang-nam-2022/
Totonchi, J. (2011, July). Macroeconomic theories of inflation. In International conference on economics and finance research (Vol. 4, No. 1, pp. 459-462).
Tsvetkova, L., Bugaev, Y., Belousova, T., & Zhukova, O. (2021). Factors affecting the performance of insurance companies in Russian federation. Montenegrin Journal of Economics, 17(1), 209-218.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171-180.
Yeboah, M., & Takacs, A. (2019). Does Exchange Rate Matter in Profitability of Listed Companies in South Africa? An Empirical Approach. International Journal of Energy Economics and Policy, 9(6), 171-178.
Atsango, V. L. (2018). Relationship Between Firm Characteristics And Profitability Of Deposit Taking Sacco’S In Kenya. University of Nairobi.
Baariu, M. J., & Peter, N. (2021). Relationship Between Selected Macroeconomic Variables and the Financial Performance of Investment Banks in Kenya. International Journal of Economics and Finance, 13(11), 1-98.
Bailliu, J., & Bouakez, H. (2004). Exchange rate pass-through in industrialized countries. Bank of Canada Review, 2004(Spring), 19-28.
Barney, J. B. (1986). Strategic factor markets: Expectations, luck, and business strategy. Management Science, 32(10), 1231-1241.
Baskin, J. (1989). An empirical investigation of the pecking order hypothesis. Financial Management, 18(1), 26-35.
Beck, N., & Katz, J. N. (1995). What to do (and not to do) with time-series cross-section data. American political science review, 89(3), 634-647.
Bhayani, S. J. (2010). Determinant of profitability in Indian cement industry: An economic analysis. South Asian Journal of Management, 17(4), 6-20.
Blažková, I., & Dvouletý, O. (2018). Investigating the differences in entrepreneurial success through the firm-specific factors: Microeconomic evidence from the Czech food industry. Journal of Entrepreneurship in Emerging Economies, 11(2), 154-176.
Bodnar, G. M., & Gentry, W. M. (1993). Exchange rate exposure and industry characteristics: evidence from Canada, Japan, and the USA. Journal of International Money and Finance, 12(1), 29-45.
Breusch, T. S., & Pagan, A. R. (1980). The Lagrange multiplier test and its applications to model specification in econometrics. The Review of Economic Studies, 47(1), 239-253.
Bui, H., Nguyen, D., Tran, D., Hoang, P., Pham, M., & Tran, M. (2020). Determinants influencing the profitability of listed food processing firms in Vietnam. Accounting, 6(4), 441-452.
Cassel, G. (1918). Abnormal deviations in international exchanges. The Economic Journal, 28(112), 413-415.
Chabachib, M., Hersugondo, H., Ardiana, E., & Pamungkas, I. D. (2020). Analysis of company characteristics of firm values: Profitability as intervening variables. International Journal of Financial Research, 11(1), 60-70.
Chen, K. Y., Elder, R. J., & Hsieh, Y.-M. (2007). Corporate governance and earnings management: The implications of corporate governance best-practice principles for Taiwanese listed companies. Journal of Contemporary Accounting & Economics, 3(2), 73-105.
Dioha, C., Mohammed, N. A., & Okpanachi, J. (2018). Effect of firm characteristics on profitability of listed consumer goods companies in Nigeria. Journal of Accounting, Finance and Auditing Studies, 4(2), 14-31.
Doğan, M. (2013). Does firm size affect the firm profitability? Evidence from Turkey. Research Journal of Finance and Accounting, 4(4), 53-59.
Egbunike, C. F., & Okerekeoti, C. U. (2018). Macroeconomic factors, firm characteristics and financial performance. Asian Journal of Accounting Research, 3(2), 142-168.
Fama, E. F., & Schwert, G. W. (1977). Asset returns and inflation. Journal of Financial Economics, 5(2), 115-146.
Ghazali, N. A. M. (2010). Ownership structure, corporate governance and corporate performance in Malaysia. International Journal of Commerce and Management, 20(2), 109-119.
Hall, M., & Weiss, L. (1967). Firm size and profitability. The Review of Economics and Statistics, 49(3), 319-331.
Hovakimian, A., Opler, T., & Titman, S. (2001). The debt-equity choice. Journal of Financial and Quantitative Analysis, 36(1), 1-24.
Hussain, I. (2015). Macro economy and profitability of insurance companies: a post crisis scenario in Pakistan. Pakistan Business Review, 17(2), 243-263.
Issah, M., & Antwi, S. (2017). Role of macroeconomic variables on firms’ performance: Evidence from the UK. Cogent Economics and Finance, 5(1), 1405581.
Izedonmi, P. F., & Abdullahi, I. B. (2011). The effects of macroeconomic factors on the Nigerian stock returns: A sectoral approach. Global Journal of Management and Business Research, 11(7), 25-29.
Kartiningsih, D., & Daryanto, W. M. (2020). The effect of firm characteristics to profitability of food and beverage companies listed in Indonesia stock exchange. International Journal of Business, Economics and Law, 22(1), 69-76.
Khatab, H., Masood, M., Zaman, K., Saleem, S., & Saeed, B. (2011). Corporate governance and firm performance: A case study of Karachi stock market. International Journal of Trade, Economics and Finance, 2(1), 39.
Kumar, K., Rajan, R., & Zingales, L. (1999). What Determines Firm Size? (No. 2211). CEPR Discussion Papers.
Le, T., Mai, V., & Nguyen, V. (2020). Determinants of profitability: Evidence from construction companies listed on Vietnam Securities Market. Management Science Letters, 10(3), 523-530.
Mahoney, J. T., & Pandian, J. R. (1992). The resource‐based view within the conversation of strategic management. Strategic Management Journal, 13(5), 363-380.
Majumdar, S. K. (1997). The impact of size and age on firm-level performance: some evidence from India. Review of Industrial Organization, 12(2), 231-241.
Malik, H. (2011). Determinants of insurance companies profitability: an analysis of insurance sector of Pakistan. Academic Research International, 1(3), 315-321.
Marsh, P. (1982). The choice between equity and debt: An empirical study. The Journal of Finance, 37(1), 121-144.
Mathur, S. S., & Kenyon, A. (1997). Creating value: shaping tomorrow's business: Butterworth-Heinemann.
McNamara, R., & Duncan, K. (1995). Firm performance and macro-economic variables: Bond University, School of Business.
Muchir, H. G. (2012). The impact of macroeconomic variables on the performance of the Nairobi securities exchange. University of Nairobi,
Mukras, M. S. (2015). Financial leverage and performance of listed firms in a frontier market: Panel evidence from Kenya, European Scientific Journal, 11(7), 534-550.
Mwangi, F. K. (2013). The effect of macroeconomic variables on financial performance of aviation industry in Kenya. University of Nairobi.
Myers, S. C. (1984). Capital Structure Puzzle (No. 1393). National Bureau of Economic Research, Inc.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13(2), 187-221.
Nanda, S., & Panda, A. K. (2018). The determinants of corporate profitability: an investigation of Indian manufacturing firms. International Journal of Emerging Markets, 13(1), 66-86.
Nguyen, N. M., & Tran, K. T. (2021). Factors influencing business efficiency of steel firms: Evidence from Vietnam. The Journal of Asian Finance, Economics, and Business, 8(1), 295-304.
Novita, B. A., & Sofie, S. (2015). Pengaruh struktur modal dan likuiditas terhadap profitabilitas. Jurnal Akuntansi Trisakti, 2(1), 13-28.
Pervan, M., Pervan, I., & Ćurak, M. (2019). Determinants of firm profitability in the Croatian manufacturing industry: evidence from dynamic panel analysis. Economic Research-Ekonomska Istraživanja, 32(1), 968-981.
Romus, M., Anita, R., Abdillah, M. R., & Zakaria, N. B. (2020). Selected firms environmental variables: Macroeconomic variables, performance and dividend policy analysis. Paper presented at the IOP Conference Series: Earth and Environmental Science.
Saeed, M. M., Gull, A. A., & Rasheed, M. Y. (2013). Impact of capital structure on banking performance (A case study of Pakistan). Interdisciplinary Journal of Contemporary Research in Business, 4(10), 393-403.
Shyam-Sunder, L., & Myers, S. C. (1999). Testing static tradeoff against pecking order models of capital structure. Journal of Financial Economics, 51(2), 219-244.
Steuart, J. (1767). An Inquiry Into the Principles of Political Economy (Vol. 1). A. Millar, and T. Cadell.
Stierwald, A. (2010). Determinants of Profitability: An Analysis of Large Australian Firms (No. wp2010n03). Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
Stiglitz, J., Stiglitz, J. E. S., & Greenwald, B. (2003). Towards a new paradigm in monetary economics: Cambridge University Press.
Titman, S., & Wessels, R. (1988). The determinants of capital structure choice. The Journal of Finance, 43(1), 1-19.
Tổng cục Thống kê Việt Nam (2022). Thông Cáo Báo Chí Tình Hình Kinh Tế - Xã Hội quý III và 9 tháng năm 2022. https://www.gso.gov.vn/du-lieu-va-so-lieu-thong-ke/2022/09/thong-cao-bao-chi-tinh-hinh-kinh-te-xa-hoi-quy-iii-va-9-thang-nam-2022/
Totonchi, J. (2011, July). Macroeconomic theories of inflation. In International conference on economics and finance research (Vol. 4, No. 1, pp. 459-462).
Tsvetkova, L., Bugaev, Y., Belousova, T., & Zhukova, O. (2021). Factors affecting the performance of insurance companies in Russian federation. Montenegrin Journal of Economics, 17(1), 209-218.
Wernerfelt, B. (1984). A resource-based view of the firm. Strategic Management Journal, 5(2), 171-180.
Yeboah, M., & Takacs, A. (2019). Does Exchange Rate Matter in Profitability of Listed Companies in South Africa? An Empirical Approach. International Journal of Energy Economics and Policy, 9(6), 171-178.
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