5. Determinants of financial performance of firms in Vietnam

Abstract

This study investigates the determinants of return on assets (ROA) of non-financial listed firms in Vietnam during 2020 - 2024. Based on agency theory, it examines financial leverage (LEV), firm size (SIZE), and high revenue growth (GROWTH) using 2,350 firm-year observations from audited financial statements and the Vietstock database. After cleaning missing and outlier data, panel regression models were applied with diagnostic tests for heteroskedasticity, autocorrelation, and multicollinearity. The Feasible Generalized Least Squares (FGLS) method was used to ensure robust results. Findings reveal that growth has a positive and significant effect on ROA, while leverage negatively affects profitability. Firm size shows no significant influence, highlighting that sustainable growth is the main driver of performance, whereas expansion alone does not guarantee higher returns. The study contributes updated empirical evidence, offering implications for managers to enhance resource efficiency and for policymakers to promote transparency and sustainable development in Vietnam’s non-financial sector.