Research purpose: This study aims to investigate the impact of cash flows (CF) from operating, investing, and financing activities on the financial performance (FP)of listed enterprises on the Vietnam stock exchange (VNX). The research seeks to clarify which types of cash flows contribute most to firm profitability and provide empirical evidence for enhancing financial management practices in emerging markets.
Research motivation: Cash flow information is considered more reliable than accounting profit in evaluating a firm’s sustainability and value creation. However, existing studies present mixed evidence regarding the relationship between cash flow components and FP, particularly in developing nations. Vietnam, with its dynamic stock market and significant role of listed enterprises, provides an appropriate context to reexamine this issue.
Research design, approach, and method: Panel data from 119 non-financial firms that were listed on the Vietnam stock exchange between 2021 and 2023 is used in the study. ROE, ROA, and ROS are metrics used to assess FP. Cash flows from financing, investing, and operating operations are examples of independent variables; business size and financial leverage serve as controls. The findings of the Hausman test are used to determine whether to use fixed or random effects in panel regression models.
Main findings: The findings show that all three profitability metrics are positively impacted by operating cash flow (OCF). Investing cash flow (ICF) is positively correlated with ROS but has no influence on ROA or ROE. Financing cash flow (FCF) positively affects ROE, while leverage reduces both ROE and ROS. Firm size shows no significant impact.
Practical/managerial implications: The findings highlight the central role of operating cash flow in sustaining firm profitability and suggest that managers should improve cash flow management, optimize investment decisions, and control financial leverage. The study provides insights for investors, regulators, and policymakers in enhancing financial stability and efficiency in emerging capital markets.
