The Impact of Capital Structure on Firm Performance: Evidence from Vietnam

Nguyen, Hong Haï; Nguyen, Anh Huu

doi:10.13106/jafeb.2020.vol7.no4.97

Cited by 90 publications

(97 citation statements)

References 39 publications

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“…Therefore, only when the capital demand exceeds the supply capacity from the content capital, the enterprise can mobilize from the loan. This is also consistent with the study of Baral (2004), Akhtar (2005), Gurcharan (2010), Shubiri (2010), Akinlo (2011), Sharif et al (2012), Nguyen and Nguyen (2020).…”

Section: Discussionsupporting

confidence: 91%

“…They argue that a profitable enterprise tends to mobilize internal rather than external resources, and firms often reduce debt. This negative relationship can be found in the study of Baral (2004), Akhtar (2005), Gurcharan (2010), Shubiri (2010), Akinlo (2011), Sharif et al (2012), Nguyen and Nguyen (2020). The hypothesis is as follows: H 1 : Profitability of listed construction companies is negatively correlated with capital structure.…”

Section: Hypothesesmentioning

confidence: 91%

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Factors Affecting Capital Structure of Listed Construction Companies on Hanoi Stock Exchange

Nguyen¹,

Tran²

2020

JAFEB

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The aim of this article is to determine the influence of factors on the capital structure of construction companies listed on the Hanoi Stock Exchange. The data of the article were collected and calculated from the financial statements of 54 construction companies listed on Hanoi Stock Exchange from 2012 to 2019. With the application of E-view software in quantitative analysis to build panel data regression model (panel data), the article has built a regression model to determine the relationship of intrinsic factors affecting the capital structure of construction companies listed on Hanoi Stock Exchange. In the study, dependent variable is capital structure, determined by the debt-toequity ratio. Profitability, coefficient of solvency, size, loan interest rate, structure of tangible assets, and growth are independent variables. The results showed that the two factors of growth and firm size positively affect the capital structure, the profitability factor has the opposite effect on capital structure. Factors of short-term debt solvency, average loan interest rate and tangible asset structure have no correlation with capital structure. The findings of this article are useful for business administrators, helping business managers make the right financial decisions to make capital structure decisions in their own conditions.

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Section: Discussionsupporting

confidence: 91%

Section: Hypothesesmentioning

confidence: 91%

Factors Affecting Capital Structure of Listed Construction Companies on Hanoi Stock Exchange

Nguyen¹,

Tran²

2020

JAFEB

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“…Different kinds of literature support the strong influence of leverage on a firm's profitability. According to some studies regarding leverage and profitability, both variables move oppositely, which means they are negatively associated (Muritala, 2012;Salim and Yadav, 2012;Soumadi and Hayajneh, 2012;Abdel-Jalil, 2014;Hasan et al, 2014;Ramadan and Ramadan, 2015;Siddik et al, 2017;Nguyen and Nguyen, 2020). Here, capital structure is calculated as:…”

Section: Capital Structurementioning

confidence: 99%

Issues on Bank’s Capital Structure and Profitability: A Developing Country Context

Sarker¹,

Islam²

2021

IJEBA

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Purpose: The study aims to show the effect of capital structure on banks' profitability in developing countries. Design/Methodology/Approach: The study is conducted on 28 commercial banks from 2009 to 2016 of panel data to infer the concurrent relationship between capital structure and profitability. The preliminary diagnoses picked up the Generalized Methods of Moments (GMM) method to address the endogeneity issue in dynamic panel data. Findings: The study found that the bank's capital structure is negatively associated with profitability and vice versa. Moreover, asset tangibility and regulatory capital harm banks' current capital structure, whereas tax shield and 1-year lagged capital structure have a positive influence. On the contrary, a bank's profitability is positively associated with bank growth, and 1-year lagged profit, while credit risk and liquidity are negatively affected. The study implies that banks should use an appropriate mixture of debt and equity; otherwise, immature decisions in capital structure may demise banks' profitability, which will ultimately turn into bank failure. Practical Implications: Adherence to the adoption of stringent capital structure allures banks in maximizing profit to cope with market competition. Beyond the theoretical aspects, the study extends its scope in the practical implications of adopting a profit-maximizing capital structure in a developing country context. However, capital structure choice differs from bank to bank based on their performance and position in the market. The study clearly addressed some of the relevant issues which affect banks' performance adversely in practice. Originality/Value: The study contributes to the existing literature and tries to explain the role of capital structure in banks' performance, mostly in submerge economies.

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“…According to Berger and Patti (2006), financial leverage has a positive effect on dependent variables about financial performance. On the other hand, Astami et al (2010), Chu Thi Thu Thuy et al (2015, Nguyen and Nguyen (2020) suggested that financial leverage has negative impact on financial performance. However, according to Alipour (2012), financial leverage has a positive impact on ROE and negative impact on ROA and ROS.…”

Section: H6: Liquidity Has a Positive Impact On Financial Performancementioning

confidence: 99%

The Impact of Foreign Ownership and Management on Firm Performance in Vietnam

Nguyen¹,

Pham²,

Dao³

et al. 2020

JAFEB

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The human and capital resources from foreign investors are important sources of finance for developing countries. Foreign ownership can help the firm to raise funds for operations and the foreign management can help the firm expand the market and improve management. However, does this really happen to Vietnamese firm? To find the answer to that question, this paper examines the impact of foreign ownership and management on the financial performance of listed firms on Vietnam's stock market. The data collected include 427 listed firms in all fields over five years, from 2014 to 2018. The financial performance is measured by Tobin's Q, ROA and ROE. The study carried out testing of each model by the least squares method of Pool OLS, assessing random effects (REM) and evaluating fixed effects (FEM). The most effective model is the FEM model. The results show that the foreign ownership ratio and the size of the firm have a positive impact on the financial performance. The foreign management, the age of the firms, the liquidity and financial leverage have a negative impact on the financial performance. Based on the research results, the study proposes some recommendations to improve the financial performance of listed firms in Vietnam.

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The Impact of Capital Structure on Firm Performance: Evidence from Vietnam

Cited by 90 publications

References 39 publications

Factors Affecting Capital Structure of Listed Construction Companies on Hanoi Stock Exchange

Factors Affecting Capital Structure of Listed Construction Companies on Hanoi Stock Exchange

Issues on Bank’s Capital Structure and Profitability: A Developing Country Context

The Impact of Foreign Ownership and Management on Firm Performance in Vietnam

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