Selecting Different Industrial Competitors Influence The Risk Level of Viet Nam Commercial Electric Companies

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 commercial electric industry, on the market risk of 99 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 doubles (measured by equity beta var of 0,157) and leverage down to 20% or remaining as current.
Beside, the emprical research findings show us that when financial leverage increases up to 30%, max asset beta value decreases from 0,240 to 0,229 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.
KEYWORDS : risk management; competitive firm size; market risk; asset and equity beta; commercial electric industry