Abstract
PurposeThis article studies the impact of micro and macro factors on firm performance in the context of an emerging economy just changed from a subsidized economy to a market economy.Design/methodology/approachThe authors carried out an investigation into 30 listed food processing companies in Vietnam from 2014 to 2019. The data are analyzed by using STATA software. In this study, beside the regression analytical technique, the Blinder–Oaxaca decomposition analysis is used to study more deeply the effect of variables on financial performance of food processing companies, so its results are reliable base to give suggestions.FindingsThe results of empirical research help us to have some following conclusion. First, two variables consisting of total assets turnover ratio (ATR) and growth in sales significantly influence financial performance, when it is measured by return on equity (ROE) or return on sales (ROS). Second, leverage significantly negatively impacts return on sale. Third, there are difference in financial performance and the effect of predictors on dependent variable “ROS” between state-owned enterprises (SOEs) and non SOEs, and the causes come from the component effect.Originality/valueIn fact, although a range of previous researches on that topic have been carried out, none of them dig deeper reasons resulting to the differences in financial performance between SOEs and non SOEs, whereas Vietnamese economy has just changed to a market economy since 1986, making impacts of State ownership totally different from other countries. In this study, the authors use the t-test and analysis to have more accurate conclusions about that problem.
Highlights
Always does the high financial performance draw main attention from every manager, because it plays a vital position within the structure and development of a firm, that aim is often challenged by many factors, leading to a low level of firm performance
The result of Breusch and Pagan Lagrangian multiplier test shows that the p-value is 0.0000, so random effect panel data regression is more suitable for research sample than ordinary least square (OLS)
Companies manufacturing food products play an important role in the Vietnamese economy, but the financial performance of firms in this industry is not as high as the expectation, studying determinants of their financial performance is a necessary activity
Summary
Always does the high financial performance draw main attention from every manager, because it plays a vital position within the structure and development of a firm, that aim is often challenged by many factors, leading to a low level of firm performance. That result is greater than 0, according to many researchers, a company’s ROE should be at least 15% to ensure the company’s financial capacity and helps it become more interesting to investors Their financial ratio of mean ROS is 5.1%, it is an acceptable result, but in a period of strong growth of the economy, that level is expected to be at least 10%, so it is not appreciated, especially when the food processing industry has received a lot of priorities from the Government and it is considered as the spearhead economic sector. There were firms that did not take advantage of the development of the economy, indicating a need of finding out factors impacting on financial performance of listed Vietnamese food processing companies and demand of reasonable measures suggested in order to improve their business results. There is significant correlation between ROE and some variables including total ATR, leverage and growth in sales
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