Income diversification and firm's performance of companies listed in Viet nam

• Published in: Macroeconomics and finance in emerging market economies 2021-12, Vol.ahead-of-print (ahead-of-print), p.1-16
• Main Authors: Nguyen, Anh Phong, Phan, Huy Tam, Ngo, Phu Thanh, Vu, Thi Thanh Tuyen
• Format: Article
• Language: English
• Subjects: companies listed in VietNam; firm's performance; Income diversification
• ISSN: 1752-0843; 1752-0851
• DOI: 10.1080/17520843.2021.2005303

This study aims to evaluate the impact of income diversification, structure of ownership and other factors on firm performance in terms of both book and market efficiency, using the data of listed non-financial firms from 2010 to 2019. The HHI index is used as the proxy to measure income diversity while ROA and MVA are used to measure book and market efficiency respectively. The authors apply panel data regression methods to examine the effect between variables. The results show that income diversification has positive effect on book efficiency and negative effect on market efficiency. In terms of ownership structure, the state ownership has a negative relationship with book efficiency but positive relationship with market efficiency while the impacts of foreign ownership are positive but not significant for both book and market efficiency. Besides, operating cash flow and size have positive effect while leverage has negative effect on both book and market efficiency. Furthermore, for age, growth and liquidity, only the relationship between age and market efficiency is significantly, and it is positive. In terms of comparison between industries, all industries have been worse book performance than the information technology industry. For market efficiency, only the oil and gas industry and the raw material industry have lower performance than the information technology industry, the other industries are more effective than the information technology industry. The study provides policy implications on how to diversify income according to ownership forms, industry characteristics and other aspects of the enterprise.