Abstract
This paperwork evaluates the impacts of external financing on market risk for the listed firms in the Viet nam real estate industry, esp. during and after the financial crisis 2009-2011.First of all, by using quantitative and analytical methods to estimate asset and equity beta of total 45 listed companies in Viet Nam real estate industry with a proper traditional model, we found out that the beta values, in general, for many institutions are acceptable.Second, under 3 different scenarios of changing leverage (in 2011 financial reports, 30% up and 20% down), we recognized that the risk level, measured by equity and asset beta mean, decreases when leverage increases to 30% but increases more if leverage decreases down to 20%.Third, by changing leverage in 3 scenarios, we recognized the dispersion of risk level, measured by equity beta var, increases from 0,219 to 0,316 if the leverage increases to 30% whereas decreases to 0,166 if leverage decreases to 20%. But the dispersion measured by asset beta var decreases to 0,082 (leverage down 20%), showing leverage impact.Finally, this paper provides some outcomes that could provide companies and government more evidence in establishing their policies in governance. Keywords: equity beta, financial structure, financial crisis, risk, external financing, real estate industry JEL CLASSIFICATION : G010, G100 , G390
Highlights
Financial leverage has certain effects on the risk level of listed companies on stock exchange. Flifel (2012) stated today, the assumption of efficient capital markets is very controversial, especially in these times of crisis, and is challenged by research showing that the pricing was distorted by detection of long memory
The Viet Nam real estate industry is selected for the research because until now there is no research published with the same scope and because Viet Nam real estate industry is considered as one of active economic sectors in local financial markets, which has some positive effects for the economy
We mention some issues on the estimating of impacts of external financing on beta for listed real estate industry companies in Viet Nam stock exchange as following: Issue 1: Whether the risk level of real estate industry firms under the different changing scenarios of leverage increase or decrease so much
Summary
Financial leverage has certain effects on the risk level of listed companies on stock exchange. Flifel (2012) stated today, the assumption of efficient capital markets is very controversial, especially in these times of crisis, and is challenged by research showing that the pricing was distorted by detection of long memory. We mention some issues on the estimating of impacts of external financing on beta for listed real estate industry companies in Viet Nam stock exchange as following: Issue 1: Whether the risk level of real estate industry firms under the different changing scenarios of leverage increase or decrease so much. Market risk (beta) under the impact of tax rate, includes: 1) equity beta; and 2) asset beta In this case, all beta values of 45 listed firms on VN real estate industry market as following:. If leverage increases up to 30%, all beta values of total 45 listed firms on VN real estate industry market as below: www.iiste.org. If leverage decreases down to 20%, all beta values of total 45 listed firms on the real estate industry market in VN as following:. All three above tables and data show that values of equity and asset beta in the case of increasing leverage up to 30% or decreasing leverage degree down to 20% have certain fluctuation
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