Tài liệu Financial management system of vietnam posts and telecommunications group and its effects on financial efficiency of the company

THAI NGUYEN UNIVERSITY SOUTHERN LUZON STATE UNIVERSITY Socialist Republic of Viet Nam Republic of Philippines TO THI NGOC LAN (ENGLISH NAME: JENNY) FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY DOCTORAL DISSERTATION AUGUST, 2013 i THAI NGUYEN UNIVERSITY SOUTHERN LUZON STATE UNIVERSITY Socialist Republic of Viet Nam Republic of Philippines TO THI NGOC LAN (ENGLISH NAME: JENNY) FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY DOCTORAL DISSERTATION ADVISER: DR. JOANNA PAULA A. ELLAGA AUGUST, 2013 ii ACKNOWLEDGMENT I would like to express my gratitude to Dr. Joanna Paula A. Ellaga and Dr. Ooi Pit Tatt for being outstanding advisors and excellent professors. Their constant encouragement, support, and invaluable suggestions made this work successful. They have been everything that one could want in an advisor. I would like to thank them for providing me ideas on the research methodology and valuable insights on financial management system. I am deeply indebted to Dr. Nguyen Thanh Hai and Ms. Trinh Thi Hieu International Training Center, Thai Nguyen University of the Socialist Republic of Vietnam, for their enormous pursuit to provide the Vietnamese people an opportunity to grow through education. Aslo, I would like to thank all the lecturers of DBA1 course for helping me to complete this dissertation which I have been their student for three years. I would like to acknowledge my best friends in the DBA 1 class for reviewing my dissertation and providing valuable feedback. I am grateful to Mr. Ngo Anh Cuong and Mr. Nguyen Duy Phuong for their help and valuable advice, and for being great friends throughout my program stint. I am deeply and forever indebted to my family for their love, support, and encouragement throughout my entire life. I would like to thank my husband, Nguyen Trung Kien, who has provided a tremendous amount of love and support throughout this study. On a final note with love are for my five-year old son! iii DEED OF DECLARATION I, To Thi Ngoc Lan (English name: Jenny), hereby submit my dissertation for oral examination, entitled “FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATION GROUP AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY”, truthfully declare that the said paper is a product of my original research investigation. Signed this …………………….2013 at Thai Nguyen University TO THI NGOC LAN DBA Candidate iv TABLE OF CONTENTS CHAPTER I: ................................................................................................................1 INTRODUCTION........................................................................................................1 1.1. Statement of the objectives...................................................................................3 1.2. Significance of the Study ......................................................................................4 1.3. Scope and limitation of the Study........................................................................5 1.4. Definition of terms ................................................................................................6 CHAPTER II:...............................................................................................................9 RELATED LITERATURE.........................................................................................9 2.1. Review of related studies ......................................................................................9 2.1.1. Foreign studies .................................................................................................9 2.1.2. Local studies...................................................................................................10 2.2. Theoretical and conceptual framework ............................................................12 2.2.1. Enterprise finance...........................................................................................12 2.2.2. Financial management system .......................................................................16 2.2.3. Financial efficiency ........................................................................................23 2.3. Research Paradigm.............................................................................................24 CHAPTER III: ...........................................................................................................28 METHODOLOGY ....................................................................................................28 3.1. Research Design ..................................................................................................28 3.2. Time and Place of Study.....................................................................................28 3.3. Data collection method .......................................................................................28 3.4. Population, Sample and sampling technique ...................................................29 3.5. Research instrument...........................................................................................29 3.6. Data gathering procedure ..................................................................................30 v 3.7. Data processing method .....................................................................................30 3.8. Statistical treatment............................................................................................31 CHAPTER IV: ...........................................................................................................33 PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA..............33 4.1. Profile of VNPT...................................................................................................33 4.1.1. Type of company............................................................................................33 4.1.2. Size of company .............................................................................................34 4.2. Current status of financial management system of VNPT from 2010 to 2012 ......................................................................................................................................37 4.2.1. Capital mobilization in VNPT........................................................................37 4.2.2. Capital management and use in VNPT ..........................................................47 4.2.3. Asset management in VNPT ..........................................................................59 4.2.4. Management of revenues, expenses and profit distribution in VNPT ...........71 4.3. Effects of financial management system on financial efficiency of the VNPT. ......................................................................................................................................80 4.3.1. Assess the financial efficiency of VNPT .......................................................80 4.3.2. Effects of the financial management system to the financial efficiency of VNPT .......................................................................................................................81 4.4. Problem encountered by financial management system of VNPT .................82 CHAPTER V:.............................................................................................................83 CONCLUSIONS AND RECOMMENDATIONS...................................................83 5.1. Summary of the findings ....................................................................................83 5.2. Conclusions.........................................................................................................87 5.3. Recommendations ...............................................................................................88 vi ABSTRACT In the background of deeper and wider regional and international economic integration, enterprises have to face with more formidable competition from big multinational economic organizations in the world. In order to adapt to that situation, meeting to demands for economic development and market expansion out of boundary of countries, many countries are incessantly increase scales of businesses, establishing and developing economic groups. Vietnamese enterprises are not out of that trend. The establishment and development of Vietnamese economic groups both ensure the suitability to the development tendency of global economy and exploit inherent competitive advantages of the country, speeding economic growth of the country. In order to ensure the high efficiency of those economic groups and State owned enterprises, it is necessary to improve efficiency of financial management system of economic groups. Although this system has taken much progress which has some certain effects on raising financial efficiency of the economic groups, many troubles and constraints still exist; for example, Financial management policies and measures of the groups are collectivistic, not closing to the actual situation of each State owned group, which has no small constraint on the financial effectiveness of economic groups in VietNam. To contribute to the enhancement of financial efficiency of economic groups in VietNam in the new situation, it is compulsory to research, innovate financial management system of economic groups. In expectation of contributing some ideas about perfecting financial management system of State owned economic groups, I, the author would like to choose the subject: vii “FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP (VNPT) AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY” for this dissertation. With such an approach to issues, the main objectives of dissertation is study the current status of system financial management of VNPT and its effect on financial efficiency of company. The specific objectives of this study are: (1) To identify the profile of the company in terms of the following: Type of the company and Size of the company; (2) To determine the current status of financial management system of VNPT in terms of the following: Capital mobilization, Capital management and use, Asset management, Revenue, expense and profit distribution management; (3) To assess the financial efficiency of VNPT in terms of the following financial ratios: the asset turnover ratio and the debtor days ratio; (4) To determine the effects of the financial management system to the financial efficiency of VNPT; (5) To identify the problems encountered in carrying out the financial management system of VNPT; (6) To propose actions that will respond to the problems encountered in carrying out the financial management system of VNPT. In order to obtain main objectives of study, the researcher used the descriptive method to get data which includes: Primary data was collected by sending questionnaires to 169 respondents (CFO of VNPT, director of financial department of VNPT, deputy director of financial department of VNPT, CFO of VNPT’s subsidiaries) working in VNPT and its subsidiaries and secondary data: From the annual financial reports of VNPT from 2010 to 2012. For assessing the current status of VNPT’s financial management system, the dissertation focuses on studying the profile and the formation and development process of VNPT as well as VNPT’s regulations on capital mobilization, management and use of capital and assets, viii management of revenues, expenses and profit distribution, thereby assessing financial management system and its effects on VNPT’s financial efficiency from 2010 to 2012. All this proves that the financial management system of VNPT effects positively to financial efficiency of the Group. ix LIST OF TABLES Table 1. Distribution of the respondents......................................................................29 Table 2. Verbal interpretation ......................................................................................30 Table 3. The autonomic level of capital mobilization in VNPT................................40 Table 4. The safe level in mobilizing capital of VNPT ..............................................41 Table 5. Assets and equity of VNPT from 2010 to 2012.............................................42 Table 6. The autonomic level in mobilizing capital of the VNPT’s subsidiaries ......43 Table 7. Clarity and fulfilment in harmonizing capital mechanism of VNPT.............44 Table 8. Reasonable level regulated the loan limit at the rate payable on capital not exceeding 3 times:........................................................................................................45 Table 9. The level of autonomy and self-responsibility at VNPT in using and managing capital: .........................................................................................................52 Table 10. Level of capital preserve in VNPT ..............................................................53 Table 11. The level of responsibility in the management and use of the owner’s capital of VNPT ...........................................................................................................55 Table 12. The effectiveness of investment outsite the sector VNPT ..........................56 Table 13. The transparency of ownership and the right of using assets in VNPT.......67 Table 14. The level of conservation of the assets in VNPT.........................................69 Table 15. The level of efficiency in the use of assets in VNPT...................................70 Table 16. The level of losses and wastage in the use of assets in VNPT ....................71 Table 17. The clarity and transparency in managing revenues, expenses, and profit distribution in VNPT....................................................................................................75 Table 18. The Level in harmonizing between the interests of the state, corporations and employees in managing revenues, expenses and profits distribution in VNPT ....76 x Table 19. Revenue of VNPT from 2010 to 2012.........................................................77 Table 20. The clarity of the regulations on the distribution of profits which subsidiaries must contribute to VNPT group...............................................................78 Table 21. Profits of VNPT from 2010 to 2012 ............................................................79 Table 22. The asset turnover ratio of VNPT from 2010 to 2012.................................80 Table 23. The debtor days ratio of VNPT from 2010 to 2012.....................................81 Table 22. The asset turnover ratio of VNPT from 2010 to 2012.................................86 Table 23. The debtor days ratio of VNPT from 2010 to 2012.....................................86 xi LIST OF CHARTS Chart 1. The autonomic level of capital mobilization in VNPT ................................40 Chart 2. The safe level in mobilizing capital of VNPT ..............................................41 Chart 3. The autonomic level in mobilizing capital of the VNPT’s subsidiaries ......43 Chart 4. Clarity and fulfilment in harmonizing capital mechanism of VNPT.............44 Chart 5. Reasonable level regulated the loan limit at the rate payable on capital not exceeding 3 times:........................................................................................................46 Chart 6. The level of autonomy and self-responsibility at VNPT in using and managing capital: .........................................................................................................52 Chart 7. Level of capital preserve in VNPT ................................................................54 Chart 8. The level of responsibility in the management and use of the owner’s capital of VNPT.......................................................................................................................55 Chart 9. The effectiveness of investment outsite the sector VNPT ............................57 Chart 10. The transparency of ownership and the right of using assets in VNPT .......68 Chart 11. The level of conservation of the assets in VNPT.........................................69 Chart 12. The level of efficiency in the use of assets in VNPT...................................70 Chart 13. The level of losses and wastage in the use of assets in VNPT.....................71 Chart 14. The clarity and transparency in managing revenues, expenses, and profit distribution in VNPT....................................................................................................76 Chart 15. The Level in harmonizing between the interests of the state, corporations and employees in managing revenues, expenses and profits distribution ...................77 Chart 16. The clarity of the regulations on the distribution of profits which subsidiaries must contribute to VNPT group...............................................................79 xii LIST OF FIGURES Figure 1. Research Paradigm....................................................................................25 xiii LIST OF ABBREVIATIONS CEO Chief Executive Officer CFO Chief Financial Officer EGs Economic Groups FMS Financial Management System SEG State owed Economic Group VNPT Vietnam Posts and Telecommunications Group xiv Thai Nguyen University Southern Luzon STATE University Socialist Republic of Vietnam Republic of Philippines Date, July 28, 2013 APPROVAL SHEET This dissertation, entitled, “FINANCIAL MANAGEMENT SYSTEM OF VIETNAM POSTS AND TELECOMMUNICATIONS GROUP (VNPT) AND ITS EFFECTS ON FINANCIAL EFFICIENCY OF THE COMPANY” prepared and submitted by To Thi Ngoc Lan (Jenny) in partial fulfillment of the requirements for the degree of Doctor in Business Administration, has been examined and recommended for acceptance and approval for FINAL ORAL EXAMINATION. Dr. JOANNA PAULA A. ELLAGA Adviser Signature.......................................................... xv CHAPTER I: INTRODUCTION There are many studies about financial management system in economic groups under the eyes of theory, situation evaluation as well as summary of experience in the country and foreign countries. Followings are typical ones: Firstly, the study, which was published into book, has title: “Business Groups and financial management system in Business Groups” published in 2003, by author Pham Quang Trung. This study shows many basic theoretical matters about financial management system in economic groups, State owned enterprises as well as descriptions, summaries, analysis of overall picture of actual situation of applying financial management system in economic groups, State owned enterprises in Vietnam in the first period when economic groups, State owned enterprises started to go into operation. Nowadays, with profound changes in economic groups, State owned enterprises under the changes of State’s policies as well as influences of economic integration on economic groups, the value of those analysis and evaluation may not keep intact and need to be updated. Secondly, the study under form of textbook has title “Financial management of modern enterprises” published in 2009, author Duong Huu Hanh. This study, although not directly mentioning words “financial management system in economic groups”, has contents of financial management in modern enterprises under the view of financial management of enterprises. However, this is study compiled on the background of studies of American and Australian professors, having color of a 1 textbook, so being more theoretical. Thirdly, the study “Establishment and management of business Groups in VietNam” in 1996 and the author Nguyen Dinh Phan. In this study, the author has written few pages of financial management in business groups; however, to some extent, the content about this issue is limit and suggestive. From that time, the operation of the State owned enterprises in VietNam has had many alterations, so does the financial management system. The issue of financial management system in the economic groups gets the attention of not only scholars in the country but also many foreign economists. For example, Eugene F.Brigham, a German researcher, in his book "Fundamentals of Financial Management" in 2009 also refers to problems in the financial management of corporations in terms of general theoretical angles about concepts, characteristics, connotation and methods of management. Generally, about financial management system in the economic groups in Vietnam, there are some works under the form of books which mention different angles, but all were released from the 2000 onwards. Nowadays under the impact of regional and international economic integration, and the management of the State for State economic groups inevitably arises many new issues in the financial management system of economic groups in VietNam. Beside that, in recent years, Vietnam economy has gone through a very difficult period. High inflation and interest rates coupled with global economic financial crisis and public debt crisis of the European countries have a huge impact on the business situation of economic groups in Vietnam. In this economic setting, economic groups that want a firm stand in the marketplace need to be flexible and ever-innovative. Innovative financial management system is 2 one of the issues of primary concern that directly affects the survival of many economic groups in Vietnam. In expectation of contributing some ideas about perfecting financial management system of State owned economic groups, I would like to conduct this study. 1.1. Statement of the objectives This study intended to analysis of financial management system of VNPT and its effects on financial efficiency of the Group. Specifically, the specific objectives of this study are: 1. To identify the profile of the company in terms of the following: 1.1. Type of the company 1.2. Size of the company 2. To determine the current status of financial management system of VNPT in terms of the following: 2.1. Capital mobilization (focus on financing activities) 2.2. Capital management and use (focus on investment activities) 2.3. Asset management 2.4. Management of revenue, expense and profit distribution 3. To assess the financial efficiency of VNPT in terms of the following financial ratios: the asset turnover ratio and the debtor days ratio. 4. To determine the effects of the financial management system to the financial efficiency of VNPT. 5. To identify the problems encountered in carrying out the financial management system of VNPT. 3 6. To propose actions that will respond to the problems encountered in carrying out the financial management system of VNPT. 1.2. Significance of the Study Analysis of financial management system is very important in providing information for those benefits related to business activities, helping the readers is able to predict its financial situation in the future as well as risk assessment, quality of business operations, from which to make financial decisions, decide the most appropriate management. This research will be beneficial for the following: Investors take an interest in information about the financial efficiency of VNPT. On the one hand, they want to obtain the adequate amount of information needed for decision-making about investments in the Group. The main attention is paid to the degree of the risk and return on capital invested. On the other hand, owners and investors want to make sure whether invested resources are properly evaluated and optimized. Managers need to know about financial management for current and longterm decisionmaking. Continuous knowledge of VNPT performance allows managers to make right decisions on gaining of financial resources, on determination of the optimum financial structure, on allocation of free finances, on distribution of profits, and on allocation of trade credits. The knowledge of financial management is necessary for both the past and forecasting of future development. Managers make several proposals for policy makers as well as managers of VNPT about the improvement of the financial management system to enhance the financial efficiency in the new context. 4 Employees are naturally interested in prosperity, economic and financial stability of VNPT. It is concerned with job security, possibilities in wage and social policy, or other benefits provided by the employer. For researcher, provide theoretical knowledge of the financial management system of economic groups in general and VNPT in particular. This study has contributed to the enhancement of financial efficiency and has given some ideas about perfecting financial management system of State owned economic groups in VietNam in the new situation. 1.3. Scope and limitation of the Study The studying scope of the dissertation is although based on the theoretical perspective of the financial management system of the State economic corporations in general, when studying the current status of the financial management system in the state economic groups in VietNam, the author focuses the study on VNPT. The study of current status of financial management system in VNPT is performed from 2010 to 2012. In my case, Financial efficiency, viewed as dependent variables. Accounting information system practices; Financial reporting and analysis practices; Capital structure management practices; Capital mobilization practices; Capital management and use practices; Asset management practices; Revenue, expense and profit distribution management practices, viewed as independent variables. But time and my ability is limited, I will focus on: Capital mobilization practices; Capital management and use practices; Asset management practices; Revenue, expense and profit distribution management practices, viewed as independent variables. 5