Financial distress and firm performance: Evidence from Vietnam

How financial status impacts firms’ operations has long been a central question in management. In this study, we predict financial distress and examine its relationship with firm performance among listed companies in Vietnam’s manufacturing and commercial sectors. First, multiple discriminant analysis is employed to develop an estimation model for financial distress, achieving high accuracy. Subsequently, various regression methods reveal a strong association between alleviated financial distress and enhanced firm performance, controlling for leverage, firm size, foreign exchange risk, price level, and economic growth. Entrepreneurial activation under financial distress is additionally discussed.