THE IMPACT OF GEOPOLITICAL RISKS AND TRADE BALANCE ON THE PERFORMANCE OF LISTED COMPANIES IN VIETNAM

This study analyzes the impact of geopolitical risk and trade balance on the performance of Vietnamese listed firms over the period 2016–2024, using an unbalanced panel of 588 firms. The study employs a dynamic panel System Generalized Method of Moments (System GMM) estimator to address endogeneity, unobserved firm-specific effects, heteroskedasticity, and serial correlation. The empirical findings indicate that geopolitical risk exerts a positive and statistically significant effect on both return on assets (ROA) and return on equity (ROE). This suggests that, in the context of global supply chain realignments and capital reallocation, Vietnamese listed firms have been able to leverage new opportunities created by geopolitical tensions. In contrast, the trade balance shows a negative and significant relationship with firm performance, implying that improvements in the aggregate trade balance are associated with lower efficiency at the firm level. This result reflects the structural dependence of Vietnamese firms on imported raw materials, machinery, and intermediate inputs. Control variables such as firm size, tangible assets, liquidity, Tobin’s Q, and net working capital improve performance, while high financial leverage and the COVID-19 shock reduce it. Moderate inflation contributes positively to firm performance. The study offers new empirical evidence on the role of geopolitical risk and trade balance in shaping corporate performance in an emerging, export-oriented economy and provides policy implications for regulators, investors, and corporate managers.