Determining the impact of financial performance factors on bankruptcy risk: an empirical study of listed real estate companies in Vietnam

• Main Authors: Van Cong Nguyen, Thi Nga Nguyen, Thi Tu Oanh Le, Trong Than Nguyen
• Format: Article
• Language: English
• Published: LLC "CPC "Business Perspectives" 2019-10-01
• Series: Investment Management & Financial Innovations
• Subjects: bankruptcy risk; financial performance; Operating Profit Margin (OPM); Return on Assets (ROA); Return on Equity (ROE); TAT (Total Asset Turnover)
• Online Access: https://businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/12585/IMFI_2019_03_Nguyen.pdf

The risk of bankruptcy is affected by many different factors. Therefore, identifying the groups of factors affecting bankruptcy risks, especially financial performance factors, are important and necessary. The study focused on the impact of financial performance on the bankruptcy risk of real estate companies listed on Vietnam’s stock exchange. Research data were collected from 44 real estate companies listed on Vietnam’s stock exchange from 2011 to 2017 with 308 observations. The study was conducted by the quantitative method based on the logistic regression model with the help of SPSS 25 specialized software. The research results show that Return on Assets (ROA), Return on Equity (ROE) and Total Asset Turnover (TAT) have significant reverse effects on bankruptcy risk, while Operating Profit Margin (OPM) is not a relevant factor. The accuracy rate of the overall predictive model is 90.9%. This study extends the scope of literature on the impact of financial performance on the bankruptcy risk of real estate companies. Moreover, this study offers the model of bankruptcy risk prediction of the listed real estate companies in Vietnam and recommends effective solutions to improve business efficiency, limit and prevent financial risks for listed real estate companies in Vietnam.