Determinants of firm’s capital expenditure: Empirical evidence from Vietnam

Abstract

This research was conducted to investigate the factors affecting the company's capital expenditure. Data were collected from the firms listed on Ho Chi Minh Stock Exchange (HOSE) over the period of nine years from 2010 to 2018, including the sample of 192 non-financial listed companies. Three statistical approaches were employed to address econometrics issues and to improve the accuracy of the regression coefficients: Random Effects Model (REM), Fixed Effects Model (FEM) and Generalized Method of Moments (GMM). The results show that free cash flows and firm size influenced positively on capital expenditure. By contrast, other factors such as dividend, interest expenses, depreciation and working capital had negative effects on capital expenditure. Based on the research results, some key intuitive recommendations were proposed for managers and investors in order to help them in making decisions.

The Impact of Capital Investments on Firm Financial Performance – Empirical Evidence from the Listed Food and Agriculture Companies in Vietnam

“…In terms of size, the natural log of the total assets was 27.63, equivalent to 4,504.4 billion VND. The average size of the total assets of this industry was larger than that of non-financial enterprises on the HOSE (26.22) as reported by Anh & Hieu (2020).…”

“…In terms of capital investments, investment rates in the short-term (CI) and long-term effects (CI_lag) accounted for 4.89% and 4.73%, respectively. Specifically, they were higher than the non-financial listed firms in the Ho Chi Minh Stock Exchange (HOSE), which was 2.34%, as observed by Anh & Hieu (2020).…”

“…However, the data haven't been updated with the current financial situation. In Vietnam, although there have been studies on the factors affecting a firm's capital investments, such as Anh & Hieu (2020), there is still a lack of formal research on the effects of capital investments on firm performance, hence creating a research gap that deserves attention.…”

How does size affect capital expenditures? Evidence from Borsa Istanbul

“…We controlled whether companies pay dividends (DIV). Companies may pay lower dividends to shareholders because of escalating the companies' capital expenditures (Nguyen and Nguyen 2020). AGE was controlled for in the paper, because firm age measures the company's life cycle (Wang and Xie 2009).…”

Analisis Faktor-Faktor yang Mempengaruhi Capital Expenditure

“…Pengaruh Free Cash Flow terhadap Capital Expenditure. Nguyen & Nguyen (2020) menemukan bahwa free cash flow berpengaruh secara positif terhadap capital expenditure sebuah perusahaan. Penemuan tersebut menunjukkan bahwa perusahaan akan lebih mementingkan arus kas bebas untuk perolehan aset tetap.…”