PERFORMANCE OF THE VIETNAM LISTED REAL ESTATE SECTOR
2007 – 2012

In Partial Fulfillment of the Requirements of the Degree of

MASTER OF BUSINESS ADMINISTRATION

In Finance

By

Mr: Truong Quang Long Trieu

ID: MBA02039

International University - Vietnam National University HCMC

September 2013


PERFORMANCE OF THE VIETNAM LISTED REAL ESTATE SECTOR
2007 - 2012
In Partial Fulfillment of the Requirements of the Degree of
MASTER OF BUSINESS ADMINISTRATION
In finance
By
Mr: Truong Quang Long Trieu
ID: MBA02039
International University - Vietnam National University HCMC
September 2013

Under the guidance and approval of the committee, and approved by all its members,
this thesis has been accepted in partial fulfillment of the requirements for the degree.

Approved:

----------------------------------------Chairperson

---------------------------------------Committee member

----------------------------------------Committee member

---------------------------------------Committee member

----------------------------------------Committee member

---------------------------------------Committee member



Acknowledge
To complete this thesis proposal, I have been benefited from the following people:
Dr.Ho Diep, School of Business of the International University - Vietnam National
University HCMC . I am particularly grateful for his valuable guidance and support.
To all teachers, office staff of the International University - Vietnam National
University HCMC and to all my friends with their kind support.
Hochiminh City, September 2013


Plagiarism Statements
I would like to declare that, apart from the acknowledged references, this

thesis either does not use language, ideas, or other original material from anyone; or
has not been previously submitted to any other educational and research programs or
institutions. I fully understand that any writings in this thesis contradicted to the above
statement will automatically lead to the rejection from the MBA program at the
International University – Vietnam National University Hochiminh City.

ii


Copyright Statement
This copy of the thesis has been supplied on condition that anyone who
consults it is understood to recognize that its copyright rests with its author and that
no quotation from the thesis proposal and no information derived from it may be
published without the author’s prior consent.
© Truong Quang Long Trieu/MBA02039/2013

iii


Tables of Contents

CHAPTER 1: Introduction ........................................................................................ 1
1.1.

THE RATIONALE OF RESEARCH .......................................................................... 1

1.2.

THE RESEARCH’S PURPOSE .................................................................................. 8


1.3.

SIGNIFICANCE OF THE STUDY: ............................................................................. 9

1.4.

THE RESEARCH OBJECTIVE AND THE SCOPE OF RESEARCH................................... 9

1.5.

RESEARCH QUESTION .......................................................................................... 9

1.6.

STRUCTURE OF THE THESIS ................................................................................. 9

CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODELS .......... 11
2.1.

THE THEORETICAL CONCEPTS AND LITERATURES .............................................. 11

2.2.

OVERALL BACKGROUND OF VIET NAM REAL ESTATE SECTOR .......................... 16

2.3.

PRIOR STUDIES .................................................................................................. 24

2.4.


THE RESEARCH MODELS AND THE HYPOTHESES ................................................ 26

CHAPTER 3: RESEARCH METHODOLOGY ................................................... 29
3.1. RESEARCH DESIGN ................................................................................................. 29
3.2. RESEARCH VARIABLES .................................................................................. 30
3.2.1 Dependence variables ............................................................................... 30
3.2.2 Independence variables.............................................................................. 33
3.2.2.1 Fixed assets ........................................................................................ 33
3.2.2.2 Capital structure: ............................................................................... 34
3.2.2.3. Enterprise Scale (Size):................................................................................... 35
3.2.2.4. Enterprise Age: ............................................................................................... 36
3.2.2.5. The Enterprise’s Position, Location ............................................................... 36
3.3. REGRESSION MODEL............................................................................................... 38
3.4. THE METHOD OF DATA COLLECTION ....................................................................... 39
3.5. THE METHOD OF DATA ANALYSIS:................................................................ 40

iv


CHAPTER 4: DATA ANALYSIS AND FINDINGS ............................................. 41
4.1

DESCRIPTIVE STATISTICS .................................................................................. 41
4.1.1 Sample description of model 1 .................................................................. 42
4.1.1.1 Ratio of profit (EBITDA) on total assets ............................................ 42
4.1.1.2 The sample description of independent variables .............................. 44
4.1.1.3 Independent variables ........................................................................ 45
4.1.2. Sample description of model 2 ................................................................... 44
4.1.2.1. Index of market value TOBIN’S Q ..................................................... 44


4.1.2.2. Independent variables ...................................................................... 45
4.2

CORRELATIVE ANALYSIS ................................................................................... 46

4.3

REGRESSION ANALYSIS AND HYPOTHESIS VERIFICATION .................................. 49
4.3.1 EBITDA Model (Model 1) ......................................................................... 49
4.3.2 TOBIN’S Q Model (Model 2) .................................................................... 56
4.3.3 The verification of statistical hypothesizes ................................................ 63

CHAPTER 5: THE CONCLUSION AND RECOMMENDATION ..................... 69
5.1. THE CONCLUSIONS ................................................................................................. 69
5.2. RECOMMENDATIONS .............................................................................................. 71
5.3. THE LIMITATION AND ORIENTATION FOR NEXT RESEARCHES ................................. 73
5.3.1. The research’s limitation ............................................................................ 73
5.3.2. Next orientation of research ....................................................................... 73
References ................................................................................................................ ..75
Appendices................................................................................................................. .79

v


List of abbreviation
CPI

Consumer Price Index


FEM

Fixed Effect Model

FDI

Foreign Direct Investment

GSO

General Statistic Office

HNX

Hanoi Stock Exchange

HOSE

Hochiminh Stock Exchange

L

Location of firm (dummy variable)

MPI

Ministry of Planning and Investment

OLS


Ordinary Least Squares

RE

Real Estate

REIT

Real Estate Investment Trust

REM

Random Effect Model

SBV

State Bank of Vietnam

Tan

Tangibility

VSIC

Vietnam Standard Industrial Classification

vi


List of Tables

TABLE 1.1 FDI INTO VIETNAM FROM YEAR 2009 TO 2013F ........................... 2
TABLE 4.1. DESCRIPTIVE STATISTICS OF VARIABLES IN THE MODEL 1
FOR WHOLE RESEARCH SAMPLES. ............................................. 43
TABLE 4.2. DESCRIPTIVE STATISTICS OF RATIO OF PROFIT ON TOTAL
ASSETS ACCORDING TO GEOGRAPHICAL ZONE. ....................... 43
TABLE

4.3 ABOUT DESCRIPTIVE STATISTICS OF VARIABLES IN THE MODEL 2 FOR WHOLE
RESEARCH SAMPLES. ................................................................................ 45

TABLE 4.4. TOBIN’S Q DESCRIPTIVE STATISTICS ACCORDING TO GEOGRAPHICAL ZONE.

45

TABLE 4.5. CORRELATIVE MATRIX OF RESEARCH VARIABLES IN THE MODEL 1. ............. 47
TABLE 4.6. CORRELATIVE MATRIX OF RESEARCH VARIABLES IN THE MODEL 2. ............. 47
TABLE 4.9. REGRESSION RESULT OF POOLED METHOD IN THE MODEL 1. ........................ 52
TABLE 4.10. REGRESSION RESULT OF FEM IN THE MODEL 1. .......................................... 53
TABLE 4.11. REDUNDANT FIXED EFFECT TESTING RESULT OF THE MODEL 1. ................. 53
TABLE 4.12. REGRESSION RESULT OF REM IN THE MODEL 1. .......................................... 54
TABLE 4.13. HAUSMAN TESTING RESULT OF THE MODEL 1. ........................................... 55
TABLE 4.14. DESCRIPTIVE STATISTICS OF VARIABLES (NOT INCLUDE DUMMY VARIABLES)
IN THE MODEL 2 FOR WHOLE RESEARCH SAMPLES.................................... 56
TABLE 4.16. REGRESSION RESULT OF POOLED METHOD IN THE MODEL 2. ...................... 58
TABLE 4.17. REGRESSION RESULT OF FEM IN THE MODEL 2. .......................................... 59

TABLE 4.18. REDUNDANT FIXED EFFECT TESTING RESULT OF THE MODEL 2. ................ 59
TABLE 4.19. REGRESSION RESULT OF REM IN THE MODEL 2. ....................................... 60
TABLE 4.20. HAUSMAN TESTING RESULT OF THE MODEL 2. .......................................... 61


vii


List of Figures

Figure 2. 1. Overall Organizational Performance as a Second-Order Construct 14
Figure 2. 2. Structural Representation of the Financial Performance Construct . 14
Figure 3. 1. The steps of research procedure ....................................................... 29

viii


Abstract
This thesis analyze the performance of Vietnam listed real estate sector through
examine the impact of chosen factors on performance measures. The research use an
unbalanced panel of 61 listed real estate enterprises on both Hochiminh Stock
Exchange and Hanoi Stock Exchange over the period of 06 years from year 2007 to
2012 with 339 observations. Research follows study of Klauss Hammer and
Yinghong Chen (2004) about Performance of the Swedish real estate sector market
with applying in conditions of Vietnam. A panel regression model is set up on the
basis of many prior studies, extended and improving and adapting the research
requirement and condition by adding a variable Tobin’s Q which is market index of
corporate performance. The research found clear evidence that the different real estate
enterprises has different performances, the difference was not due to regional
differences but are due to the impact of the capital structure (negatively) , enterprise’s
age (negatively) as well as a portion of the impact of enterprise’s turnover
(positively), etc. The results are also shown that Vietnam listed real estate firm have
the proportion of fixed assets on total assets (tangibility) at low level and tangibility
isn’t impact on firm performance. This thing should be noted due to a one of factors
which Vietnam’s Banks consider when lending that are fixed assets. The findings can

offer hints for improving performance of Vietnam real estate firm.

Keywords: performance, real estate, panel data

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Performance of the Vietnam listed real estate sector 2007 – 2012
CHAPTER 1: INTRODUCTION
This chapter presents the reasons lead to the subject of the research, the
necessity of the research, discloses the purposes and goals of the research, identify
research objectives and scope as well as practical implications that research can
achieve, at last presenting the layout of the thesis.
1.1. The rationale of research
Real estate (RE) market has an important role in the economy and it directly
impacts on various markets such as financial and monetary market, the construction
market, building materials market and the labor market, etc. RE market is linked to a
huge amount of assets in terms of scale, nature and value. In the world, RE market is
one of the important markets of the economy. The proportion of RE on the total value
of national assets is different depend on each countries, but usually accounting for
around 40% of the total value of national assets of each country. The activities related
RE field accounted for 30% total activities of their economy. The development of the
real estate market has important implications for the economy, creating driving force
to perform building infrastructure of the country. For illustrative, we have some facts
and figures of the USA real estate market as follow:
“Real estate generates nearly one-third of U.S. gross domestic product (GDP),
creates jobs for nearly 9 million Americans, and is the source of nearly 70 percent of

local government revenues. The total contribution of the housing sector alone
approaches 20 percent of GDP. Real estate construction, construction permit activity,
and real estate sales figures are closely watched by investors on Wall Street because
of the effect real estate has on the nation’s economy. Real estate also represents a
significant share of our accumulated national wealth. The total value of owneroccupied housing and investible commercial real estate in the United States is

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Performance of the Vietnam listed real estate sector 2007 – 2012
estimated to be $26 trillion. Approximately $19 trillion of this represents the value of
owner-occupied housing. Housing alone represents approximately 27 percent of U.S.
household wealth and is the single largest asset category of households”. (Real Estate
Principles: A Value Approach, 3/e, David C. Ling, 2010, p.15-16).
Vietnam does not collect as much statistics as the US, but we can refer to some
facts and figures from foreign direct investment (FDI) into Vietnam through the years
(see Table 1.1 below). According to Report of real estate market 2012 from Phuong
Nam Securities Corporation, FDI inflows into Vietnam continuous increasing capital
is poured into the real estate market and accounts for a high proportion of FDI. This
indicates that Real Estate Market Vietnam very attractive to foreign investors. This is
one of the main sources of capital contributing to supports the growth of real estate
sector. In 2012, FDI reached $ 13 billion, of which investment in real estate sector
accounted for 14.2% of total capital investment reached U.S. $ 1.8 billion, ranking
second after FDI investment in the processing - manufacturing industry.
2009

2010

2011


2012

2013f

RE FDI (reg.)

$7.6bn

$6.8bn

$845.6mn

$1.85bn

-

FDI (reg.)

$22.6bn

$18.6bn

$14.7bn

$13bn

$13-14bn

FDI (impl.)


$10bn

$11bn

$11bn

$10.46bn

$10.5-11bn

Source: Historical data GSO, SBV, SJC, MPI, ANZ, HSBC, JP MORGAN

(According to Report 2013 of CBRE Vietnam)
Table 1.1 FDI into Vietnam from year 2009 to 2013F
In Vietnam, real estate companies are accounting for a majority of fastest
growth rate enterprise on TOP 500 fastest growing enterprises in Vietnam for period
2011, with the average growth rate: 10%-60% (according to Ranking Report of FAST
500 2012). The RE industry is growing strongly to meet the larger demand for
building housing and physical infrastructure in period of modernization and
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Performance of the Vietnam listed real estate sector 2007 – 2012
industrialization of the country. However, the rapid development of real estate sector
in the context of its causes is the real estate market boom as government policies to
boost the real estate and economic development of Vietnam received inflows of
foreign direct investment poured into. This development also has its own
imperfection. So we need to look at the development process of the real estate market
in Vietnam.
Formed after 1990, the Viet Nam RE market has experienced three times of

booming and declining (1993-1999; 2001-2006; 2007 up to now). Although the
characteristics of each period is different, but in general, the same thing in each period
is the formation speculative growth which lead the market to inflated prices and when
the bubble burst the RE market declining and/or become frozen, leading to the
collapse of a lot of the real estate companies. In all three periods, the RE market
downturn on condition of shortage of liquidity and the imbalance of supply-demand
structure in term of quantity and structure. Vietnam's real estate industry is too
immature, needs a lot of investments, need to draw on experience to develop. In
particular, Vietnam RE sector needs to orient the development in the specific
conditions of Vietnam to develop toward the right approach and appropriate way.
The Vietnam RE market is developing and is forecast to strongly developing in
future under many factors, such as:
Economic Development: Economic development of a country inevitably
increase the demand for land use in the manufacturing sector, the demand for office
space, business center ... Moreover, with economic development, income of people
will increase and thereby increasing the demand for housing.

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Performance of the Vietnam listed real estate sector 2007 – 2012
Population: population growth also means increased demand for goods in the
market, to meet for the industry expand, the development of scale which in turn
increased the demand for land use.
FDI capital: FDI capital into Vietnam constantly increasing, in which capital
flows into real estate market produce relatively high proportion. This demonstrates
that the Vietnamese real estate market very attractive to investors abroad.
Law: Law can be considered as important factors affecting the formation and
development of the RE market.
Economic, finance and currency policy of the Government: Economic Policy

of the Central Government and the Local Authorities are also sensitive factors
affecting the real estate market.
Urbanization: Vietnam is in transition from an agricultural-based economy to
a manufacturing-based economy causing a constant migration from the countryside to
cities. According to the Vietnam Urbanization Review by the World Bank, Vietnam is
urbanizing at a rate of 3.4% per year.
At present, on Vietnam’s stock exchange the real estate market has sixty one
real estate joint stock companies with forty one companies listed on HOSE and
twenty companies listed on HNX with the first trading day from 2006 to now
(according to website: www.cophieu68.com). Although, economic experts predict the
real estate market are not optimist, it is facing the major problems of lack of capital,
fluctuations in the market, human management along with weak macroeconomic,
limitation in legal frame etc, it still has high profit. People have high demand on this
sector, Vietnam’s population is increasing though land is limited, real estate is still the
potential business. Looking at the income statement of several real estate companies,
few have positive profit, however; most have losses.

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Performance of the Vietnam listed real estate sector 2007 – 2012
In the current crisis, after a period of bubble growth, the real estate market went
down and freeze. In which, the total value of the REs inventory is about 111,963
billion VND (due to 2012 Real Estate Market Report - the Ministry of Construction).
Specifically, the warning sign is the high real estate inventory: Housing, inventory
42,230 homes, Office space : 92,800 m2; Commercial center : 98,407 m2; Land :
7,922,485 m2; Commercial land : 1,951,033 m2. Along with that, there are 2,600
enterprises (include construction firm and real estate firm) has stopped or dissolved.
Furthermore, outstanding-loans of real estate (to 31/10/2012) are 207,595
billion VND, up 3.6% (compared to 31/12/2011). Non-performing loans accounted

for 6.5% of total real estate loans, but the vast majority of business real estate loans
are unlikely to pay when due from unsold products. (synthesized from Reports of the
State Bank of Vietnam).
Attracted by the high and fast returns (super profit but temporarily), many
companies have invested in the real estate market but not many firms have had
success. Developers are facing difficulties in carrying out projects. Why succeed?
Why fail? In a competitive and difficult business environment as well as the RE
sector, there are a lot of opportunity to develop but also there are many risks.
Normally, enterprise must examine the performance to recognize factors affect to its
performance and to have correcting policy. And this process is especially significant
in Vietnam, during a period in crisis.
Through 20 years of development, the Vietnam real estate market has
undergone three times of boom and bust. The volatility of the real estate market is
generally associated with macroeconomic policies and events in the economy. The
failure of the real estate firms in business partly reflects the professionalism of the real
estate firms in Vietnam is still low. Many real estate firms race to investment in the

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Performance of the Vietnam listed real estate sector 2007 – 2012
project while the schedule of RE project is very complex and required enormous
resources, especially money. Government's focus is on solutions mainly to curb
inflation, stabilize the macro-economy and ensure social security, issued guidelines
"implemented tight monetary policy " (11/NQ-CP Resolution dated 24/2/2011). In the
process of implementing, this policy has also caused a statement in which the capital
thirsty of economy has pushed many firms into difficult situations.
In March 2011, The State Bank of Vietnam (SBV) has taken a series of
measures to control interest rate ceilings on deposits in Vietnam Dong (VND). On
April 2012 the inflation is just reduced, together with applicable interest rate ceiling,

the SBV has taken measures towards cash flow to the manufacturing sector, limits the
credit on the non-manufacturing sector (including the real estate sector), while interest
rates could be adjusted for different objectives at a high level. In 2011, outstanding
interest rate is 18.3%/ year on average. In 2012, the SBV has significantly reduced
operating rates, with 5 interest rate reduction from 14% to 8%.
With that interest rate policy the consumer price index (CPI) was controlled, the
CPI increased by only 6.81% in 2012 vs. 12/2011 and increased 9.21% over the 12
month average in 2011. However, the downside of tight monetary policy is many
companies do not have access to bank credit funds. There were many barriers to firms
in accessing bank loans. The first and largest is the high interest rates 78.5% of firms
had to pay interest rates of 16% or more; more than half of the firms have to pay
interest rates of 18% or more. In addition, controlling the ratio of loans to nonproduction areas should not exceed 16% of total loans by tight monetary policy of the
SBV to direct capital flows into the production region directly is essential, but also
affect the project investment priorities as social housing segment, housing relocation,
housing for low-income people in the first half of 2012. Late 2012, early 2013, higher

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Performance of the Vietnam listed real estate sector 2007 – 2012
interest costs pushed higher capital firms, leading to efficient of business operations
decline. Meanwhile, the business situation of enterprises is difficult, market output
shrinking, increased inventory, efficiency of most companies at very low levels.
Number of enterprises that went bankrupt and/or closed skyrocketed. In 2011, about
53,000 firms, firms 2012 is approximately 58,000 (source: GSO).
The insolvency status of the firms has led to appropriated funds worsening,
increasing bank loans. The capital structure of the Vietnam enterprise became very
risky. As reported at the 2012 Conference by Bridge Investments Magazine held on
08/16/2012, in the Ho Chi Minh city, the payable rate on the equity Q II/2012 average
of 647 non-financial companies listed, up to 1.53 times, the construction industry and

real estate liabilities total more than 2 times equity (207%) and the lowest consumer
goods industry with 80%. This leads to non-performing loans and bad loans of
commercial banks to increase. Bad debt is the underlying cause that congests flow of
capital in economy, cash flow not in rotation makes it a difficult situation. In that
situation, the real estate enterprises need to have many solutions to attract capital from
social and improve the skill of business and management.
After the success and failures of RE market also as RE firms, the requirements
of examining RE firm’s performance is essential from both microeconomic and
macroeconomic points of view. From the firm’s perspective, it is an issue of existing
and increasing business performance in an increasingly difficult environment. From
the economic perspective, it is the stability and development of real estate market – an
important market of the economic.
The real estate industry have an important role in the economy but there have
not been many studies on RE firm’s performance done in Vietnam, only a few macroeconomic study have been performed. In order to evaluate the performance of

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Performance of the Vietnam listed real estate sector 2007 – 2012
Vietnam RE sector among the hot stage of developing Vietnam’s economy, it is
essential to conduct a formal analysis. This study attempts to provide empirical
evidence on the performance changes of Vietnam RE sector arising from economic
crisis over the past six years. So, we think further study of real estate firm’s
performance to examine the RE industry in period of before and during crisis and on
how this relates to main factors. Aim to find out the evidence of its affect on
performance of RE firms. Using the panel data regression (unbalance panel data)
investigates the performance of all listed RE companies. (up to now, there are 61
listed companies which to analyze the profitability).
Therefore, I want to conduct study on the performance of real estate firms, the
topic as “Performance of the Vietnam Listed Real Estate Sector ". In order to help

enterprises have a proper view of management, quantify the impact of main factors to
provide a basis for the appropriate improvements. Through that, improve and upgrade
real estate companies more and more powerful and effective developing real estate
market as well.

1.2. The research’s purpose
The study aim to solving issues arises as follow:
To investigate and study of the performance of the Vietnam listed real estate
firm (follow the approach of Klaus Hammer and Yinghong Chen, 2004).
To analyze and assess the impact of the main factors on the performance of
the Vietnam listed real estate firm.
Through these goals in order to improve the performance of Vietnam listed
real estate firms.

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Performance of the Vietnam listed real estate sector 2007 – 2012
1.3. Significance of the study:
The performance of the real estate sector in one country not only concerns the
creditors, investors, policy makers and tax authorities in that country, but also their
counterparts in other closely related countries. The study would provide insights in
structure of profitability of real estate companies.
1.4. The research objective and the scope of research
The research objective is Vietnam listed real estate firms that is operating on the
real estate market of Vietnam, including 61 real estate joint stock companies with 41
companies listed on HOSE and 20 companies listed on HNX with the first trading day
from 2006 to now.
This study is using similar approach with Klaus Hammer and Yinghong Chen
(2004) with considering specific characteristics of Vietnam economy. Applying

Ordinary Least Squares (OLS) to examine the performance of Vietnam listed real
estate sector.
1.5. Research question
1. How are performances of Vietnam listed real estate sector over last 6 years
through performance measurement by Tobin’s Q (market’s view) and by ROA
(enterprise’s perspective)?
2. Following by Klaus Hammer and Yinghong Chen approach, what is the
status of performance determinants of the Vietnam listed real estate sector?
3. What is a solution to improve performance of Vietnam listed real estate
firms according to this research result?
1.6. Structure of the thesis
To achieve the research objectives we proposed, the thesis is organized in the
layout which consists of 5 chapters and specific contents are as follows:

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Performance of the Vietnam listed real estate sector 2007 – 2012
Chapter 1: Introduction
Chapter 1 presents the reasons lead to the subject of the research, the necessity
of the research, discloses the purposes and goals of the research, identify research
objectives and scope as well as practical implications that research can achieve, after
that to present the layout of the thesis.
Chapter 2: Literature Review
This chapter reviews theoretical concepts, literatures related to firm
performance, followed by summarises and discusses the prior researches related to the
research title, presents the overall background of Viet Nam real estate market, after
that established research models and research hypotheses.
Chapter 3: Research Methodology
This chapter presents the procedure of research implementation, definition and

measurement for research variables, building regression model. Next, present the
basis of choosing research object, data source, and method and used to analyze
research data.
Chapter 4: Data Analysis and Findings
This chapter presents the results of analysis and explains those results. The
analyses include descriptive statistics, correlative analysis, and recurrent analysis of
table data to verify research hypothesizes.
Chapter 5: Conclusions and Recommendations
This chapter presents collected conclusions and research results, brings some
orientations of improving the effectiveness, output for real estate enterprise. The
chapter’s final part will present last limitations and orient next researches.

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Performance of the Vietnam listed real estate sector 2007 – 2012
CHAPTER 2: LITERATURE REVIEW AND RESEARCH MODELS
This chapter reviews theoretical concepts, literatures related to firm
performance, followed by summary and discusses the prior researches related to the
research title, after that established research models and research hypotheses.
2.1. The theoretical concepts and literatures
Theories of firm performance
There are several concepts related to firm performance. According to the open
encyclopedia Wikipedia, in economic point of view the term of performance refers to
the using of resources so as to maximize the production of goods and services. An
economic system is said to be more efficient than another (in relative terms) if it can
provide more goods and services for society without using more resources”.
And, “In absolute terms, a situation can be called economically efficient if:
• No one can be made better off without making someone else worse off
(commonly referred to as Pareto efficiency).

• No additional output can be obtained without increasing the amount of inputs.
• Production proceeds at the lowest possible per-unit cost.
In these definitions of efficiency, the main idea is that “a system is efficient if
nothing more can be achieved given the resources available”. These definitions are
general meaningful, in practice we need more specific definitions.
In accounting, the business performance relate to the concept of Profit: “profit is
the difference between the purchase and the component costs of delivered goods
and/or services and any operating or other expenses” (Wikipedia).
There are several kinds of profit measures:
Gross profit = sales revenue – cost of goods sold (COGS);
Net profit = gross profit – expenses.
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Performance of the Vietnam listed real estate sector 2007 – 2012
In comparing companies of different sizes, we use finance ratio. The
performance can be measure by profitability ratio. It reflects the efficient of resources
usage or reflects the corporate governance performance. Profitability ratio measure
how efficiently a firm uses its assets and manages its operation (the book of
Fundamentals of Corporate finance).
Profit margin = Net income / Sales
Return on Assets (ROA) = Net income / Total assets
Return on Equity (ROE) = Net income / Total equity
Through using of profitability ratio, it can capture the actual situation of
performance of the enterprise.
Firm performance measurement
According to the theory of organization and strategic management (Murphy et
al, 1996), accurate and appropriate performance measurement is critical to
understanding corporate success and failure. As organizational performance can be
judged by many different aspects, resulting in many different interpretations of

“successful performance”, organizational performance should be examined from a
single constituency perspective, that of the common stockholder in for-profit
organizations (Carton and Hofer, 2004). From this perspective, successful
organizational performance can be equated with successful value creation for
stockholders, this perspective typically equates value creation with organizational
financial performance; that’s mean the organizational financial performance.
According to Carton and Hofer (2006) reviewed the empirical studies published,
most of studies used performance as a dependent variable. The authors identified 88
different measures to measure performance. 46% of these 138 articles used only one
measure to measure performance, 25% used two measures and the 29% remaining

12