Tác động của chất lượng lợi nhuận đến tính không hiệu quả đầu tư của các doanh nghiệp niêm yết tại Việt Nam

Nội dung text: Tác động của chất lượng lợi nhuận đến tính không hiệu quả đầu tư của các doanh nghiệp niêm yết tại Việt Nam

1. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 THE IMPACT OF EARNINGS QUALITY ON THE INVESTMENT INEFFICIENCY OF LISTED COMPANIES IN VIETNAM G H G I H H H G HI Q DO H GHI P IÊM Y ẠI VI M Vu Thi Thuy Van, Tran Dieu Huong, Do Thi Thu Hang, Nguyen Minh Thu Ha, Hoang Thi Lan Anh National Economics University thuyvan@neu.edu.vn ABSTRACT The purpose of this research is to study the impact of earnings quality on investment inefficiency of listed companies on Vietnam stock market. We used secondary data of 540 listed non-financial companies on two stock exchanges which are Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) over a period of 10 years (2008 to 2017). The inefficiency investment was presented by residual from the regression model of annual revenue growth. The research concentrated on the effect of two main proxies, namely persistence and predictability earning on inefficiency investment. Control variables which consist of size, revenue growth, state ownership, and financial leverage influence inefficiency investment. Regression result shows that a positive impact has been created on inefficiency investment by the size of company. However, in the same period, predictability earning, state ownership and financial leverage causes negative effects on inefficiency investment. Meanwhile, revenue growth, persistence earning in regression model has no statistical meaning. Keywords: Earnings quality, investment efficiency, listed companies. TÓM TẮT Bài viết nghiên cứu tác động của chất lượng lợi nhuận đến tính không hiệu quả đầu tư của các doanh nghiệp niêm yết trên thị trường chứng khoán Việt Nam. Nhóm tác giả đã sử dụng dữ liệu thứ cấp của 540 doanh nghiệp phi tài chính niêm yết trên Sở Giao dịch Chứng khoán Thành phố Hồ Chí Minh (HOSE) và Sở Giao dịch chứng khoán Hà Nội (HNX) trong vòng 10 năm (từ năm 2008 - 2017). Tính đầu tư không hiệu quả được đo lường bởi phần dư từ mô hình hồi quy tăng trưởng doanh thu hàng năm. Nghiên cứu tập trung xem xét tác động của hai biến chính, đó là tính bền vững và tính dự báo của lợi nhuận. Các biến kiểm soát bao gồm quy mô, tăng trưởng doanh thu, sở hữu nhà nước và đòn bẩy tài chính cũng đều có ảnh hưởng đến sự không hiệu quả trong đầu tư. Kết quả hồi quy cho thấy tác động thuận chiều từ quy mô của doanh nghiệp lên tính đầu tư không hiệu quả. Tuy nhiên, tính dự báo của lợi nhuận, tỷ lệ phần trăm sở hữu nhà nước, đòn bẩy tài chính lại có tác động ngược chiều lên khả năng đầu tư không hiệu quả của doanh nghiệp. Bên cạnh đó, tốc độ tăng trưởng doanh thu và tính bền vững của lợi nhuận trong mô hình hồi quy không có ý nghĩa thống kê. Từ khóa: Chất lượng lợi nhuận, doanh nghiệp niêm yết, tính không hiệu quả đầu tư. 1. Introduction Investment is an important activity stimulating the development of businesses as well as the growth of the economy. Investing through investment projects not only facilitates the development of infrastructure and increases the employment growth but also boosts the development of the capital market. Therefore, investment decisions and investment efficiency of firms not only play an important role to firms but also affect the economy in general. In the world, there are numerous studies on several investment aspects such as measuring and evaluating investment efficiency; considering factors affect investment efficiency in terms of economic sectors or listed companies in different markets and economies; assessing the factors affect the under- investment or over-investment status of firm. Richardson (2006) argues that investment plays an important role in ensuring that companies develop sustainably in a competitive market and create new value for shareholders; investment policies of firms are determined based on factors such as the overall economy, macro monetary policy, capital market as well as factors of the company's operations. Over- 150
2. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 investment is understood as the use of capital flows into projects that are not profitable for businesses. This is one of the issues that many researchers concern about because it comes from the conflict of interests between shareholders and managers. In particular, studies of over-investment have been also carried out in emerging and marginal markets, which are similar to the Vietnamese market. Appearing with over-investment, enterprises may also encounter underinvestment. Consideration of inefficiencies in investment through measurement of under-investment and over-investment is approached by many researchers to make recommendations on management situation for businesses. In Vietnam, there has not been any specific studies on the investment status of firms whether they have over-investment or under-investment problems especially for listed companies which are important parts of the economy and express the power of the economy. Therefore, it is necessary to have a research on investment inefficiency as well as impacting factors to help businesses improve their investment efficiency and avoid under-investment or over-investment. Prior studies have also focused on the factors affecting investment inefficiencies such as financial reporting quality (FRQ), factors from management such as overconfidence or redundancy in cash flow. Earnings quality is one of the remarkable factors. In particular, earnings quality (EQ) is researched further in academic after a series of accounting scandals have occurred around the world during the last decade. Outstanding examples are the large American firms like Enron, Healthsouth, Parmalat, Tyco, Worldcom and Xerox, which lead to great losses for investors. In this study, from acquiring prior studies on how the financial reporting quality affects investor's decisions, we study the relationship of earnings quality and decision of business owners. 2. Research overview Accounting information plays an important and essential role in the management of micro and macro levels taking on the role of managing information resources for businesses. Accounting information is used by many objects in the economy, so the financial reporting quality is a remarkable issue. Besides, the earning is assessed as a comprehensive measure reflecting most closely with the financial situation and operation of the business. Therefore, earnings quality becomes a major concern for both inside and outside entities and attracts many research scholars. P. Dechow et al. (2010) summed up 300 earnings quality studies in leading accounting journals, thereby giving broader definition of earnings quality which is an useful characteristic for any economic decision made by any entities. They point out that the measures of earnings quality consist of two groups which are characteristics of earnings quality and the level of investor’s responsibility when considering the published profit. Besides, the authors also added a proxy to assess the earnings quality through external evidences about errors in reported earning information. In addition to the theoretical background research, there are specific studies of earnings quality associated with specific events such as Jennifer Francis et al. (2006) examined the signification of earnings quality in capital market. The idea is that the precision of financial reporting information is associated with capital market participant behavior. This research indicates the idea that factors such as the auditor size, the independence of the board of manager or the ownership structural influence earnings quality. Beisland, L. A., and Mersland, R. (2013) study about earnings quality in the microfinance industry, administrate generally the earnings quality metrics developed in the accounting literature. The authors conclude that the earnings quality in the microfinance industry to be inferior to that of other corporations. However, earnings quality in microfinance industry is assessed through scores on several earnings proxies such as smoothness, persistence, predictability or earrnings management almost similar to other industries, appropriated in prior (Dechow and Dichev 2002; Francis and Smith 2005; Lang et al. 2006; Barth et al. 2008; Dichev and Tang 2009). Moreover, there are many studies on the impact of earnings quality on economic entities as evaluating earnings quality in U.K. Private Firms (Ball, R., and Shivakumar, L., 2005). However, the majority of researchers often analysis factors affecting earnings quality such as Auditor Industry 151
3. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Specialization and Earnings Quality (Balsam, S., Krishnan, J., and Yang, JS (2003), founding family ownership and earnings quality, (Wang, D. (2006), the impact of product market competition on earnings quality (Cheng, P., Man, P., and Yi, H (2013), onsequently, studying in earnings quality is a searching branch which is being interested by scholars and researchers in the literature on financial reporting quality in particular and financial accounting in general. However, this issue is quite complex and inadequate, so this will be a topic to attract future researchers. Today, countries issue many different policies to increase investment capital from home and abroad. One of the key reasons is that investment contributes a great deal to encourage economic activities, increase national output and save foreign exchange or even increase foreign investment. In general, investment can be interpreted as a "sacrifice" of money in the present to buy real or financial assets with the aim of gaining greater profits in the future (Haming and Basalamah, 2010). In order to identify the factors affecting investment efficiency, studies examine the relationship between investment efficiency and financial and non-financial variables of firms (Seyed Moosa Mohammadi, 2014). In this paper, earnings quality indicators will be used to evaluate the impact on investment efficiency. Earnings quality is a summary indicator of the overall quality of financial reports in providing necessary information for investors when evaluating the efficiency operation of enterprises (Earnings Quality, Jennifer Francis, Per Olsson and Katherine Schipper, 2008). Based on the theory and research overview, the research team proposed the following research hypotheses: The persistence of earning considered is the stability of profit. Financial proxies are a source of information for investors to access the company's operational situation to make investment decisions. The more quality accounting information is, the less the problem of asymmetric information is, thereby the problem of inefficiency investment is also improved. With highly stable profit, the company will raise more capital from investors, thereby invest in projects with positive NPV, minimize under-investment. Hypothesis 1: The persistence of earning has a negative impact on the inefficiency investment of enterprises Those who use accounting information consist of managers, shareholders, and potential investors also pay attention to predictable earnings. If this prediction is increasing, managers will be able to catch the upward or downward trend of earnings. Therefore, this can improve inefficiency investment problem. When earning information reflects plenty of its tendencies, it might influence the performance of investors. Hypothesis 2: The predictable earning effects negatively on ineffective investment in the company. Previous researches have indicated that there is a negative link between the ratio of state ownership and the effectiveness of investment. The state-ownership company witnesses more and more the agency cost theory. Maria Maber and Thomas Andersson (1999) pointed out that their managers increased self- interest instead of maximizing the benefits of shareholders. This allows them to invest in the under- performing projects rather than effective projects, which created overinvestment and underinvestment. (Jiang et al., 2009) state that state-owned enterprise managers are more likely to be self-interested because they are appointed by the government and this is a non-market technique. Besides, firms which have a high proportion of government ownership are easily supported by their governments when it encounters financial issues. Therefore, these managers tend to expand investment with the less concern about risk, which easily leads to overinvestment. Hypothesis 3: State ownership influence positively on inefficient investment. Size of company reflects quantitative factors about production and business of the company through total asset ratio. Large corporations often face political cost. This means that when companies extend about the size, they will be strictly controlled by governments (Watt & Zimmerman) (1990). Moreover, large enterprises often have available capital supplies. Therefore, these companies often implement overinvestment more than those, which have limited capital and need to make investment choice carefully. 152
4. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Hypothesis 4: Scale enterprises affect positively inefficiency investment Using financial leverage appropriately affects positively on companies. Companies often use debt to makes use of tax shield. These companies must be strict oversight of government, creditors, and constraint of covenant debt. Thereby, managers often attempt to improve profitability to meet the legal requirement, pay interest and principal for creditors. They also boost effective operation to keep the leverage ratio reasonably and avoid highly maintaining borrow. Therefore, it helps companies to optimize the cost of capital to keep company through financial problems, which lead to bankruptcy. So, underinvestment and overinvestment also are restricted. Hypothesis 5: Leverage ratio influence negatively on inefficiency investment Companies which maintain sustainable sales growth extended potentially production and business. Therefore, it makes increase the interest of shareholders. In the enlarging process, enterprises can get around to projects to increase company value through investing on effective which have positive NPV. Hypothesis 6: Revenue growth effect negatively on inefficiency investment 3. Research methods The method of data collection The purpose of this research is to study the impact of earnings quality on investment efficiency of listed companies on Vietnam stock market. We used secondary data of 540 listed non-financial companies on two stock exchanges which are Ho Chi Minh City Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) over a period of 10 years (2008 to 2017). Data was selected on the following basis: companies are required to have sufficient data of research variables: Income statement, balance sheet, cash flow statement. Data was provided by Stoxplus Corporation. Data processing methods First of all, using the collected data, we calculated the necessary criteria by Microsoft Excel 2013. Then Panel Data model in Stata statistics software was used to continue to analyze the data. We analyzed the correlation between the independent variables in the model and conduct descriptive statistics the variables of the model through some typical quantities such as average, variance, standard deviation, maximum value, minimum value. Then, we used the estimation method in building regression model with array data, leading to the choice between three models which are Random Effect, Fixed Effect or GLS to regression by Stata software. 4. Research model 4.1. Research variable Dependent variable: Investment inefficiency As stated by Biddle et al. (2006), Chen, Hope, Li & Wang (2011) and Gomariz & Ballesta (2014), for measuring investment inefficiency, we use deviation from the expected investment formula via investment prediction model as a function of revenue growth model. The residual error is negative value, which is under-investment and in contrast, the positive value of the residual error represents for over- investment. Below is the research model: Invest i,t = β0 + β1 EG i,t-1+ β2%RevGrowth i,t-1 + β3 EG*%RevGrowth i,t1 + εi,t In which, - Invest: The capital expenditures. - NEGi,t Dummy variable which will be equal 1 if the value of a firm’s revenue growth is negative and 0 if otherwise. - RevGrowthi,t-1: The annual revenue growth rate of firm i in year (t-1), which is equal to: - ei,t: Residual value. 153
5. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 According to Biddle et al. (2009), the value of deviation from the expected investment (the amount of residual error) is a proxy for investment inefficiency. The negative value means under-investment and the positive one indicates over-investment. Independent variable: Earnings quality For measuring earnings quality, we focus on 2 proxies: persistence and predictability of earnings quality. Predictability: for measuring the predictability of earnings quality, we use the model proposed by Beisland (2013) with data of listed companies on HOSE and HNX from 2008 to 2017. The estimation model is as follow: Earningsi,t = β0 + β1 Earningsi,t-1 + εi,t In which: - Earningsi,t: Net income of firm i in year t. - Earningsi,t-1: Net income of firm i in year t-1. - ei,t: residual value. Estimating this model, predictability of earnings quality is calculated via R2 from the model. Persistence: Following Leuz et al. (2003), we calculate the persistence of earnings via the ratio between the standard deviation of earnings and the standard deviation of cash flow from operation activities: In which: - Persistence: Stability of earnings. - Std (Earnings)t: Standard deviation of Net income. - Std (CFO)t: standard deviation of Cash Flow from Operation activities. Control variables For promoting the model, control variables in this model are firm’s size, the growth rate of revenue, financial leverage and the proportion of state ownership in companies. Firm’s size is the natural logarithm of total assets, the ratio of leverage is measured by dividing total debts to total assets and the growth rate of revenue is measured in the following way: 4.2. Research model Based on prior research related to the impact of financial reporting quality on investment efficiency of companies, this study measures the influence of earnings quality on investment efficiency of firms as well as the impact of factors which are firm's size , financial leverage, ownership structure and the growth rate of revenue on investment efficiency as control variables in this model. Based on our given hypothesis, we test our hypothesis by regression models which are as follows: Model 1: Model 2: 154
6. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Table 1: Research variables in the model Variable Sign Measurement Effect Dependent Investment inefficiency INEFF The residual value of model 1 Persistence PERSIS - Predictability PREDIC The residual value of model 2 + The ratio of state ownership: State ownership STATE + Independent Size SIZE Firm’s size: n ( otal assets) + The leverage ratio: Leverage LV _ The growth rate of revenue: Revenue growth rate GROWT _ Source: Summed up by research team The chart shows the relationship between factors in the model. Chart 1: Relationship between factors in model 1 Source: Summed up by research team Chart 2: Relationship between factors in model 2 Source: Summed up by research team 155
7. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Besides, when considering earnings quality, firm’s size, revenue growth rate, financial leverage and state ownership in enterprises affect investment efficiency, in empirical test, several studies point out that these factors have relationships and effects on each other. Therefore, the next goal of this paper is examining the effect of control variables on earnings quality in companies. So, the research model is built based on Structural equation modeling. 5. Research findings 5.1. Descriptive statistics of data series Table 2: Descriptive statistics of variables in the model Variable Mean Standard deviation Min Max INVEST 9.34e+10 9.42e+11 -2.05e+13 2.87e+13 PERSIS 0.8443844 0.4761926 -0.223309 1.2922 PREDIC 1.008035 1.616754 0.0111964 6.319385 STATE 22.73092 24.08434 0 65.8 SIZE 27148.13 1476.574 24473 30065 LV 49.31802 22.29326 10.1 80.6 GROWTH 11.33648 35.13208 -46.5 138.1 Source: Calculated by the research team based on statistical software Stata Regarding investment value, the total investment of listed companies on HOSE and HNX in the period of 2009-2017 had the mean value of 93.4 billion VND, the lowest of -20500 billion VND and the highest of 28700 billion VND. In addition, the coefficient of variation (CV = standard deviation / mean) of about 10.09 showed that the level of dispersion was quite high and that there was a distinct difference in total investment among companies. Regarding company size, industries in the economy, on average, were quite large in terms of total assets. Based on the results of descriptive statistics stated above, Ln (total assets) had the mean value of 27.15, the lowest of 24.47. Thus, it can be seen that the average total assets of companies is about VND 537.4 billion, which is ranked in the category of large scale; the lowest of about 42.38 billion dong. The private capital size of VND 100-500 billion accounts for the largest proportion. However, the proportion is gradually decreasing and there has been instead a stable increase at those companies of 2000- billion total assets during the last 10 years. This has shown that the total assets size of the whole economy is leisurely expanding. Regarding state ownership structure, the average state capital ratio of companies is 22.73%, from non-state-owned companies to the highest capital ownership of 65.8%. The standard deviation of this indicator of 24.08% is also high and there is a distinct difference with the expected value of large companies. Regarding leverage ratio, the average leverage ratio of listed companies is 49.31%, with the max value of 80.6% and the min of 10.1%. The standard deviation of leverage ratio is 22.29%, CV = 0.452. With such value of coefficient of variation, it can be seen that the distance between the highest and lowest LV values is short, reflecting the narrow dispersion of the leverage target. Regarding the revenue growth, the mean value of revenue growth is 11.34%, with the highest of 138.1% and the lowest of -46.5%. The standard deviation of this target is 35.13%, which is quite high 156
8. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 showing the great level of variability and dispersion around the mean value due to the typical industries with unforeseen growth compared to the average of other sectors. Regarding the earnings persistence, the earnings persistence value is expected to be 0.844 with the standard deviation of up to 0.476. The range of this indicator is also quite narrow when the min is -0.022 and max is up to 1.2922. Regarding the earnings predictability, the mean value is 1.008035, with a standard deviation of 1.616754. Table 3: The matrix of correlation coefficients among independent variables in the model PREDIC PERSIS STATE SIZE LV GROWT PREDIC 1 PERSIS -0.2637 1 STATE -0.0233 -0.0298 1 SIZE -0.0099 0.0085 -0.0162 1 LV -0.1057 -0.0083 0.0562 0.3549 1 GROWT 0.0212 0.0269 -0.1286 0.0922 0.0485 1 Source: Calculated by the research team based on statistical software Stata Table 3 shows the correlation among factors is quite low. In particular, the correlation coefficient between Persis and Leverage is -0.0083, and between Leverage and Size of 0.3549 is the highest. This shows that the factors are not closely related to each other and are fairly independent. The purpose of checking the close correlation between independent and dependent variables is to eliminate factors that can lead to multicollinearity before running the regression model. The correlation coefficient among the independent variables in the model does not have any pairs greater than 0.8; therefore, multicollinearity is less likely to occur. In particular, the correlation coefficient of -0.2637 is a practical demonstration of the inverse relationship between predictability and persistence of earning quality (according to Mohammady, A. (2010)). 5.2. Model selection  Model 1: The research team compared and selected which model would be suitable for the regression of INEFF dependent variable according to PERSIS in the three models: OLS (ordinary least squares), REM (Random effects model), FEM (Fixed impact model). To consider and select the appropriate model among these three regression methods, the research team used F test and Hausman tests. First, F test was conducted to make the choice of using OLS or FEM model. The team used F-test with the hypothetical pairs: H0: OLS model is appropriate; H1: FEM model is appropriate. The result showed that Prob > F = 0.0000, i.e p-value = 0.0000 chi (2) = 0.0000, i.e p- value < 5%, which meant sufficiently grounded to reject H0, showing that the use of FEM is appropriate. 157
9. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 However, before analyzing in details the factors affecting INEFF, the research team conducted the following tests: Heteroscedasticity, autocorrelation and necessary corrections to overcome the limitations of the model. Testing the Heteroscedasticity: If the test result indicates p-value was small, commonly less than 0.05, the hypothesis H0 would reject, H1 accepted. The test result was shown that the Prob value> chi2 = 0.0000, p-value t [95% Conf. Interval] PERSIS 0.0351594 0.0345823 1.02 0.309 -0.0326498 0.1029686 GROW 0.0113258 0.0443969 0.26 0.799 -0.0757279 0.0983795 SIZE 0.0009466 0.0000527 17.97 0.000 0.0008433 0.0010499 STATE -0.0006095 0.0002185 -2.79 0.005 -0.0010379 -0.000181 LV -0.0016049 0.0002024 -7.93 0.000 -0.0020017 -0.0012081 _cons -0.659798 1.425996 -0.46 0.644 -3.455896 2.1363 Source: Calculated by the research team based on statistical software Stata The estimation results show that state ownership (STATE) and leverage ratio (LV) have the negative impact on the investment inefficiency. The LV variable has the negative impact on the investment inefficiency, consistently with the views of Weill (2008), Berger and Bonaccorsi di Patti (2006). According to Jensen (1986), using debt reduces the phenomenon of overinvestment from the phenomenon of representative expense. The debt puts the companies under the supervision of creditors and more strictly when the lender is a bank. Companies are required to pay their debts regardless of their financial status, rather than whether they can choose to pay dividends or not. Therefore, managers tend to restrict excessive investment, limiting the phenomenon of inefficient investment. The results of the negative relationship between the growth rate and the investment inefficiency are consistent with the previous hypotheses and studies of Anthony and Ramesh (1992), Feng Chen (2010), Sajjadi et al. (2009). The increase in the revenue growth rate of the company makes investors believe in it and contribute capital to implement projects that have positive NPV without which the company could ignore such projects, leading to underinvestment. The ownership structure has the negative impact on the investment inefficiency, which is contrary to the hypothesis proposed. It can be explained that when a company has a high rate of state ownership, it is entitled to policy incentives as well as funding when necessary and can avoid ignoring projects with negative NPV, minimizing the underinvestment. This is also consistent with the views of Sun, Tong and Tong (2002), Tian and Estrin (2005), Rui (2006). In contrast to STATE, LV, the model indicated that there existed a positive correlation between firm size (SIZE) and investment inefficiency. This is consistent with some previous hypotheses and studies. (Watts and Zimmerman, 1990) argued that large companies were more likely to prefer disruptive and downward activities because of the higher possibility to increase the government control when they become bigger and more profitable.  Model 2: Similar to model 1, the group also performed steps including Hausman test, F test, model limitation test and error correction by using GLS model. The result was shown in Table 5: 158
10. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Table 5: Regression results of investment efficiency with earnings predictability Coef. Std.Err. t P > t [95% Conf. Interval] PREDIC -0.0244445 0.0112516 -2.17 0.030 -0.0465069 -0.002382 GROWT -0.0034376 0.0450498 -0.08 0.939 -0.0917727 0.0848976 SIZE 0.0009334 0.0000542 17.23 0.000 0.0008272 0.0010396 STATE -0.0006814 0.000221 -3.08 0.002 -0.0011147 -0.000248 LV -0.0015771 0.0002062 -7.65 0.000 -0.0019815 -0.0011728 _cons -0.2523354 1.46704 -0.17 0.863 -3.128957 2.624287 Source: Calculated by the research team based on statistical software Stata The research findings also revealed that there were three factors that negatively affect the investment inefficiency of the company, including state ownership, leverage and earnings predictability, while size have positive impact. The earnings predictability has a negative impact on the investment inefficiency, which is consistent with the hypothesis stated. Other factors have the same effect as the given results in model 1. 6. Conclusion The paper examined the impact of earnings quality along with the corporate characteristic factors on the investment inefficiency of the non-financial companies listed on Vietnam's stock market in ten years from 2008 to 2017. Based on the research findings, all of the four factors proposed for analysis are related to the investment efficiency of the company. The research results show that only the earnings predictability has an impact on the investment inefficiency of enterprises in the sample. This shows that forecasting and planning are important factors contributing to the better investment efficiency of businesses. Profit information may be reflected in the business results of the enterprise. Especially, two factors need to be paid proper attention to: the firm’s size and leverage. arge-scale companies often own excess capital and are prone to unprofitable projects, which increases the level of overinvestment. This result promotes companies to use debt in a reasonable structure to reduce the investment inefficiency. Based on the research findings, the research team would like to propose a number of solutions and recommendations for businesses to minimize under and overinvestment as follows: Firstly, the factor of business size, measured by the total amount of assets, reflecting the business performance of an enterprise has a positive impact on the investment inefficiency, i.e. when the production and business situation of a company improve, it has to face more government control, often having more available capital, thus more over-investment, as well as reducing investment efficiency and increasing inefficiency. Therefore, the company is required to establish a skilled management system, capture its current stage of development, from which it can take the right step and avoid investment inefficiency. Secondly, leverage in business represented by the debt to total assets ratio has also been demonstrated to have a negative effect on the investment inefficiency. When this ratio increases, it is likely that businesses have made use of the debt advantages to increase earnings, thereby helping to enhance the investment efficiency as well as reduce the inefficiency of companies. Thus, the determination of a reasonable capital structure with the specific situation of each enterprise to balance the benefits from debts and avoid the risk of default is an important task for each company. Thirdly, the ownership structure factor represented by the state ownership ratio of the company has a negative relationship with the investment inefficiency. The higher the percentage of state ownership, the more likely it is to receive support from the state, thereby increasing the efficiency of investment, as well 159
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