The Impact of Selecting Different Industrial Competitors on the Risk Level of Viet Nam Hardware Companies During The Financial Crisis 2007-2009

Abstract

This research shows marketing factors such as business competitors could affect business market risk, from a quantitative point of view. Using a two (2) factors model, this research paper estimates the impacts of not only the size of firms’ competitors, but also leverage in the hardware industry, on the market risk of 22 listed companies in this category.  This paper founds out that the risk dispersion level in this sample study could be minimized in case the competitor size remaining as current (measured by equity beta var of 0,067) and leverage down to 20%. Besides, the empirical research findings show us that when financial leverage increases up to 30%, max asset beta value decreases from 1,069 to 1,033 in case the size of competitor doubles. Last but not least, this paper illustrates calculated results that might give proper recommendations to relevant governments and institutions in re-evaluating their policies during and after the financial crisis 2007-2011.