Tax rates effects on the risk level of listed Viet Nam real estate firms during global economic crisis 2007-2009

The emerging stock market in Viet Nam has been developed since 2006 and affected by the financial crisis 2007-2009. This study analyzes the impacts of tax policy on market risk for the listed firms in the real estate industry as it becomes necessary. First, by using quantitative and analytical methods to estimate asset and equity beta of total 45 listed companies in Viet Nam real estate industry with a proper traditional model, we found out that the beta values, in general, for many institutions are acceptable. Second, under 3 different scenarios of changing tax rates (20%, 25% and 28%), we recognized that there is not large disperse in equity beta values, estimated at 0.750, 0.762 and 0.769. Third, by changing tax rates in 3 scenarios (25%, 20% and 28%), we recognized both equity and asset beta mean values have positive relationship with the increasing levels of tax rate. Finally, this paper provides some outcomes that could provide companies and government more evidence in establishing their policies in governance.


Introduction
Together with the development of the whole economy and the growth of FDI, throughout many recent years, Viet Nam real estate industry is considered as one of active economic sectors, which has some positive effects for the economy.
This paper is organized as follow.The research issues and literature review will be covered in next sessions 2 and 3, for a short summary.Then, methodology and conceptual theories are introduced in session 4 and 5. Session 6 describes the data in empirical analysis.Session 7 presents empirical results and findings.Next, session 8 covers the analytical results.Then, session 9 presents analysis of risk.Lastly, session 10 will conclude with some policy suggestions.This paper also supports readers with references, exhibits and relevant web sources.

Research Issues
We mention some issues on the estimating of impacts of tax rates on beta for listed real estate companies in Viet Nam stock exchange as following: Issue 1: Whether the risk level of real estate firms under the different changing scenarios of tax rates increase or decrease so much.
Issue 2: Whether the disperse distribution of beta values become large in the different changing scenarios of tax rates estimated in the real estate industry.
Beside, we also propose some hypotheses for the above issues: Hypothesis 1: because tax may strongly affect business returns, changing tax scenarios could strongly affect firm risk.
Hypothesis 2: as tax policy is vital for the business development, there will be large disperse in beta or risk values estimated.Smith (2004) mentions in Chicago, properties located in a designated TIF (tax increment financing) district will exhibit higher rates of appreciation after the area is designated a qualifying TIF district when compared to those properties selling outside TIF districts, and when compared to properties that sell within TIF district boundaries prior to designation.

Literature review
David (2009) stated the U.S states can increase the likelihood of using tax rate adjustments to cope with fiscal volatility rather than (more harmful) spending fluctuations.Robert et all (2011) recognized a significant positive relation between changes in intercorporate investment and changes in corporate marginal tax rates on ordinary income.
George and Jot Yau (2012) found that there is a positive relationship between transaction cost and price volatility, suggesting that the imposition of a transaction tax could increase financial market fragility, increasing the likelihood of a financial crisis rather than reducing it.Mark (2012) found in some European countries during the crisis raising taxe rates and tax burdens, the trend in which overall revenue levels were broadly stable while marginal rates in corporate and top personal income declined has stopped.Then, Filip (2012) believed low levels of taxation, esp.low levels of taxation on the income or wealth of the so-called productive segments of society are beneficial for economic growth.
Finally, tax rate can be considered as one among many factors that affect business risk of real estate firms.

Conceptual theories
The impact of fiscal policy on the economy Tax policy is one among major fiscal policies.When the government decides to change the tax policy or tax rates, the mobility of capital in the markets will be affected.
In a specific industry such as real estate industry, on the one hand, using tax policy with a decrease or increase in tax rate could affect tax revenues, profit after tax and financial results and compensation and jobs of the industry.And it also shows the purpose of fiscal policy: following either contractionary or expansionary directions.
During and after financial crises such as the 2007-2009 crisis, there raises concerns about fiscal policies or public policies of many countries, in both developed and developing markets.The government might choose either lowering the tax rates or cutting the public expenditures while increasing demand stimulating programs to resolve difficulties from the crisis.

Methodology
In this study, we use the live data during the crisis period 2007-2011 from the stock exchange market in Viet Nam (HOSE and HNX) to estimate systemic risk results and tax impacts.
In this research, analytical research method is used, philosophical method is used and specially, tax rate scenario analysis method is used.Analytical data is from the situation of listed insurance firms in VN stock exchange and current tax rate is 25%.
Finally, we use the results to suggest policy for both these enterprises, relevant organizations and government.

General Data Analysis
The research sample has total 45 listed firms in the real estate market with the live data from the stock exchange.
Firstly, we estimate equity beta values of these firms and use financial leverage to estimate asset beta values of them.Secondly, we change the tax rate from 25% to 28% and 20% to see the sensitivity of beta values.We found out that in 3 cases (rate = 20%, 25%, and 28%), asset beta mean is estimated at 0.362, 0.367 and 0.370 which are negatively correlated with tax rate.Also in 3 scenarios, we find out var of asset beta estimated at 0.750, 0.762 and 0.769 (almost the same) which shows acceptable risk dispersion.Tax rate changes almost has no effect on asset beta var under financial leverage.

Empirical Research Findings and Discussion
In the below section, data used are from total 45 listed insurance companies on VN stock exchange (HOSE and HNX mainly).In the scenario 1, current tax rate is 25% which is used to calculate market risk (beta).Then, two (2) tax rate scenarios are changed up to 28% and down to 20%, compared to the current corporate tax rate.
Market risk (beta) under the impact of tax rate, includes: 1) equity beta; and 2) asset beta.

Scenario 1: Current tax rate is 25%
In the case of tax rate of 25%, all beta values of 45 listed firms on VN real estate market as following:    Based on the above results, we find out: Equity beta mean values in all 3 scenarios are low (< 0,8) and asset beta mean values are also small (<0,4) although max equity beta values in some cases might be higher than (>) 1.In the case of current tax rate of 25%, equity beta value fluctuates in an acceptable range from 0.07 (min) up to 1.77 (max) and asset beta fluctuates from 0,019 (min) up to 1.58 (max).If corporate tax rate increases to 28%, equity beta changes from 0.075 to 1.77 and asset beta move in a range from 0.02 to 1.583.When tax rate decreases down to 20%, equity beta value changes from 0.062 to 1.77 and asset beta fluctuates in a range from 0.016 to 1.575.
Beside, Exhibit 6 informs us that in the case 28% tax rate, average equity beta value of 45 listed firms increases to 0.007 while average asset beta value of these 45 firms increase slightly up to 0.003.Then, when tax rate reduces to 20%, average equity beta value of 45 listed firms goes down to -0.01 and average asset beta value of 45 firms down to -0.005.
The below chart 1 shows us : when tax rate decreases down to 20%, average equity and asset beta values increase slightly (0.750 and 0.362) compared to those at the initial rate of 25% (0.762 and 0.367), which shows opposite movement compared to the market index.At the same time, when tax rate increases up to 28%, average equity beta decreases slightly whereas average asset beta value remains unchanged (to 0.769 and 0.370).However, the fluctuation of equity beta value (0.262) in the case of 20% tax rate is higher than (>) the results in the rest 2 tax rate cases.

Risk analysis
On the one hand, in the case of decreasing tax rate, (20%), the market and companies can receive more benefits such as generating more jobs, output and compensation, but the government budget can have deficit and the government has to cut expenditures.Hence, changes in tax rates can have both positive and negative impacts on the local market.
On the other hand, in the case of increasing tax rate (28%), the government will have budget to finance public expenditures but the income tax burden could reduce both demand and supply, as well as the output, jobs and compensation.

Conclusion and Policy suggestion
In summary, the government has to consider the impacts on the mobility of capital in the markets when it changes the tax policy or tax rates.Beside, it continues to increase the effectiveness of building the legal system and regulation and macro policies supporting the plan of developing real estate market.The Ministry of Finance Continue to increase the effectiveness of fiscal policies and tax policies which are needed to combine with other macro policies at the same time, although we could note that in this study when tax rate is going to increase up to 28%, the risk level does not increase so much, compared to the case it is going to decrease down to 20%.And the risk dispersion during 2007-2009 (asset beta var of 0.115) is higher than that during 2007-2011 (0.111) in case tax 25%.
The State Bank of Viet Nam continues to increase the effectiveness of capital providing channels for real estate companies.Furthermore, the entire efforts among many different government bodies need to be coordinated.
Finally, this paper suggests implications for further research and policy suggestion for the Viet Nam government and relevant organizations, economists and investors from current market conditions.

Equity beta
Asset beta (assume debt beta = 0) T h g 1 -0 6 T h g 4 -0 6 T h g 7 -0 6 T h g 1 0 -0 6 T h g 1 -0 7 T h g 4 -0 7 T h g 7 -0 7 T h g 1 0 -0 7 T h g 1 -0 8 T h g 4 -0 8 T h g 7 -0 8 T h g 1 0 -0 8 T h g 1 -0 9 T h g 4 -0 9 T h g 7 -0 9 T h g 1 0 -0 9 T h g 1 -1 0 T h g 4 -1 0 T h g 7 -1 0 and Sustainability.All rights reserved.This open access article is distributed under a Creative Commons Attribution (CC-BY) 4.0 license.You are free to: Sharecopy and redistribute the material in any medium or format Adaptremix, transform, and build upon the material for any purpose, even commercially.The licensor cannot revoke these freedoms as long as you follow the license terms.Under the following terms: Attribution -You must give appropriate credit, provide a link to the license, and indicate if changes were made.You may do so in any reasonable manner, but not in any way that suggests the licensor endorses you or your use.No additional restrictions You may not apply legal terms or technological measures that legally restrict others from doing anything the license permits.Economics, Management and Sustainability(ISSN: 2520-6303) is published by Scientific Publishing House "CSR", Poland, EU and Scientific Publishing House "SciView", Poland Publishing with JEMS ensures: • Immediate, universal access to your article on publication • High visibility and discoverability via the JEMS website • Rapid publication • Guaranteed legacy preservation of your article • Discounts and waivers for authors in developing regions Submit your manuscript to a JEMS at http://jems.sciview.netor submit.jems@sciview.net

Scenario 3: Tax rate decreases down to 20% If
corporate tax rate decreases down to 20%, all beta values of total 45 listed firms on the real estate market in VN as following: