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Global Scholars Journal of Business Management and Public Admin. Vol.1 (1), pp 1-9 March, 2014
©2014 Global Scholars Journals.


Full Length Research Paper

The risk level of Viet Nam electric power industry under financial leverage during and after the global crisis 2007-2011

Dinh Tran Ngoc Huy

Banking University, 26 Nguyen Cong Tru str, dist 1, HCM city, Viet Nam.

E-mail:  Tel: (848) 98431117.

Accepted 5 March, 2014





This paper evaluates the impacts of external financing on market risk for the listed firms in the Viet Nam Electric Power Industry (VNEPI) as it becomes necessary, especially after the financial crisis 2007-2009. Generally speaking, quantitative method is mainly used in this study whith a note that risk measure asset beta is mainly derive from equity beta and financial leverage.
First, by using quantitative and analytical methods to estimate asset and equity beta of total 20 listed companies in VNEPI with a proper traditional model, we found out that the beta values, in general, for many institutions are acceptable. The purpose of this study, therefore, is to find out how much market risk for this industry in changing contexts of financial leverage.
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% and it increases 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%.
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, Electric Power Industry.


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