The relationship between financial decisions and equity risk

Abstract

This study was conducted to determine the impact of financial decisions on equity risk in enterprises. The factors representing financial decisions include investment decisions, working capital decisions, and funding decisions. The equity risk is represented by beta in firms. Research and analysis of panel data with generalized least squares (GLS) via industry construction companies listed on the Vietnam Stock Exchange from 2015 to 2019. The data analysis results show that investment decisions do not affect equity risk, working capital decisions have a positive impact on equity risk, and funding decisions have a negative impact on equity risk. Furthermore, this study shows that agency theory does not exist in the relationship between financial decisions and equity risk in industry-construction enterprises in Vietnam. From this result, the authors also provide implications to help investors and corporation managers make decisions according to their goals based on signs of financial decisions.