How do financial leverage and supply chain finance influence firm performance? Evidence from construction sector

Abstract

This paper investigates the impact of financial leverage and supply chain finance on firm performance of Vietnamese construction sector. Although there is a big gap in the literature needed to be filled, little empirical evidence can be found on this interesting topic. Therefore, the results are essential for Vietnamese firms, particularly those in construction industry. By adopting the generalized method of moment (GMM), the results reveal the significant influence of financial leverage and supply chain finance on the performance of construction firms. In particular, firm performance (FP) is more influenced by financial leverage (FL) than supply chain finance (SCF). The findings also show that supply chain finance plays a key role in enhancing firm performance. Meanwhile, more debts and their inefficient use exert a negative impact on firm performance, which is an unprecedented finding of this study..

Impact of External Environmental Factors on Construction Firms' Performance, Mediated By Institutional Pressures

“…Similar results were obtained for H2, H3 and H4. The results of H2 are in agreement with the findings of Asamoah [64] and Bui [30], while the result of H3 is in agreement with the findings of Sun and Meng [31]. The result of H4 in this study is in agreement with the findings of Atuahene and Baiden [65], as well as Oyewobi et al [9].…”

“…Political environment has a significant negative effect on firms' productivity [29]. Economic and financial performance of construction firms are highly dependent on the degree of global economic activity, as well as the resources available to complete the work, which plays a significant role in increasing construction company performance [30]. An empirical study carried on by Sun et al (2009) contends that technological environments are typically out of the project teams' control since their existence and evolution are not dependent on any individual project, such as utilizing new materials, adopting new construction methods, and technology complexity [31].…”

Debt Financing and Firm Performance: Evidence from Vietnam

“…Debt , is the debt financing of firm i in year t, measured by the debt-to-equity ratio (Wassie, 2020;Tripathy & Shaik, 2020;Bui, 2020;Simamora, 2021). This ratio refers to the level at which firm assets are financed by debt versus equity.…”

“…The results reveal that the debt ratio impacts the return on assets negatively but the return on equity positively. Applying fixed effect regression models on the panel data of 115 microfinance co-operatives, Towoet al (2019) indicated that higher levels of debt led to lower labor productivity due to underinvestment and high labor costs Bui (2020). examined the impact of debt financing and supply chain finance on firm performance of 30 Vietnamese construction firms in the period from 2015 to 2018.…”

The Effects of Financial Leverage on Firm Performance in Shariah-Listed Consumer Products & Services Firms

“…Capital structure has a negative effect on firms' profitability (Rahman, Saima, & Jahan, 2020). Furthermore, Bui (2020) found that financial leverage had a significant impact on firm performance for the real estate industry in Vietnam, indicating the more debts and inefficient use of financial funds may bring firms more financial risks.…”