Analysing factor affecting the profitability - HOSE

Abstract

The aim of this study is to examine the impact of the internal factor on the profitability of companies listed in Ho Chi Minh stock exchange. Secondary data are collected on annual reports of 85 companies listed on Ho Chi Minh stock market from 2011 to 2016. The research employed balanced panel data for 510 observations of each of the variables of study; leverage, liquidity, inventory, sale's growth, firm size (both in term of total sales and total assets) and profitability (ROA). The study employed Pooled, REM, FEM regressions to investigate the effect of these variables on the profitability. After using Hausman test and redundant fixed effect test, FEM is applied. The Fixed effect regression shows that 78% of the profitability was influenced by the predictor variables. The results also confirm that leverage has a negative on ROA, inventory and firm size have a positive impact on the profitability while there is no relationship between sale’s growth and ROA.