An Expansion Analysis of Risk Level of Viet Nam Construction Material Industry under Financial Leverage during and after the Global Crisis                 2007-2009

Nguyen Thi Thanh Phuong; Dinh Tran Ngoc Huy; Le Ngoc Nuong; Nguyen Thu Thuy

Nguyen Thi Thanh Phuong Thuongmai University, Hanoi, Vietnam.
Dinh Tran Ngoc Huy Banking University, HCM City, Vietnam., Graduate School of International Management, International University of Japan, Niigata, Japan.
Le Ngoc Nuong Faculty of Management - Economic Law, University of Economics and Business Administration (TUEBA), Vietnam.
Nguyen Thu Thuy Faculty of Economics, University of Economics and Business Administration (TUEBA), Vietnam.

Keywords: Equity beta, financial structure, financial crisis, risk, external financing, construction material industry

Abstract

After the financial crisis 2007-2009, this paper evaluates the impacts of external financing on market risk for the listed firms in the Viet nam construction material industry.

First, by using quantitative and analytical methods to estimate asset and equity beta of total 57 listed companies in Viet Nam construction material 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 (0,259) when leverage increases to 30% and it increases (0,544) 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 if the leverage increases to 30%. And the asset beta var value is quite small, showing leverage efficiency.

Finally, this paper provides some outcomes that could provide companies and government more evidence in establishing their policies in governance.