THE STATE BANK OF VIETNAM - MINISTRY OF EDUCATION AND TRAINING BANKING UNIVERSITY OF HO CHI MINH CITY TRA THANH THANH FACTORS AFFECTING THE CAPITAL STRUCTURE OF ENTERPRISES LISTED ON THE VIETNAMESE STOCK MARKET GRADUATION THESIS MAJOR: FINANCE AND BANKING CODE: 52340201 ii HO CHI MINH CITY, 2022 THE STATE BANK OF VIETNAM - MINISTRY OF EDUCATION AND TRAINING BANKING UNIVERSITY OF HO CHI MINH CITY TRA THANH THANH FACTORS AFFECTING THE CAPITAL STRUCTURE OF ENTERPRISES LISTED ON THE VIETNAMESE STOCK MARKET GRADUATION THESIS MAJOR: FINANCE AND BANKING CODE: 52340201 SUPERVISOR ASSOCIATE PROFESSOR PH. DANG VAN DAN ii HO CHI MINH CITY, 2022 i ABSTRACT Author: Tra Thanh Thanh Title: factors affecting the capital structure of enterprises listed on vietnam’s stock market. Language: English Instructor: Associate professor Ph. Dang Van Dan The course examines factors affecting the capital structure of enterprises listed at HOSE and HNX in the period of 2012 -2021.
Based on theories of capital larva and experimental research, the thesis has formulated hypotheses and research models. The research data was collected from the financial statements of 39 companies listed in Vietnam. Using pooled OLS, FEM, REM and Driscoll & Kraay regression methods, the thesis estimates the impact of factors on the debt ratio of the business. The results of the regression show that there are 6 important factors affecting the capital structure of businesses.
The characteristics of the enterprise, the size of the company and the turnover of assets are in a favorable relationship with the debt coefficient; The three factors of tangible assets, growth rate and liquidity are inversely related to the debt coefficient. Through research, the thesis course has suggested a number of recommendations on capital structure for businesses. Keywords:Influencing factors, capital structure, D&K method ii COMMITMENT The author commits an honorary statement about your scientific thesis, specifically as follows: Full name of the author: Tra Thanh Thanh, HQ6 – GE06, Student ID: 030134180495 Currently a 4th year student majoring in Finance and Banking, Banking University Ho Chi Minh City. While studying at Banking University Ho Chi Minh, the author declares that the thesis: factors affecting the capital structure of enterprises listed on the Vietnamese stock market.
Science supervisor: Associate professor Ph. Dang Van Dan This thesis has never been submitted to any anywhere else before. The thesis is the author's own research work. The research results are reliable, in which there are no previously published contents or contents made by others except for cited sources fully in the thesis.
Ho Chi Minh City, 2022 Author Tra Thanh Thanh iii ACKNOWLEDGMENT The author would like to thank the academic staff and support staff of Banking University Of Ho Chi Minh City because of their dedicated teaching and support. It is a great honor and pride for the author to become a student at Banking University Of Ho Chi Minh City. The author would like to express the deep gratitude to the Supervisor, Associate professor Ph. Dang Van Dan, who whole heartedly supported, patiently guided and encouraged the author during doing this thesis.
iv CONTENT ABSTRACT. iv LIST OF ABBREVIATIONS. vii LIST OF TABLEAND FIGURE. Reasons for choosing the topic.
Overall research objectives. Specific research objectives. Research subject and scopes .4 CHAPTER II: LITERATURE REVIEW. Optimum capital structure.
Theories about the capital structure of the business. Miller and Modigliani theory. Static trade-off theory. Dynamic trade-off theory.
Hierarchical order theory. Market timing theory. Indicators for measuring capital structure. Factors affecting the capital structure of the business.
Corporate income tax. The size of the business. Characteristics of corporate assets. Outlook for capital markets.
Fluctuations in the season, business cycle. Regulations from management levels. EXISTING EMPIRICAL STUDIES. Conclusion of Chapter 2 .21 CHAPTER III: METHODOLOGY AND DATA.
Experimental research model of factors affecting the capital structure of enterprises on the Vietnamese stock market. Data processing method. Panel data regression. Conclusion of chapter 3.
RESEARCH RESULTS AND DISCUSSION OF RESEARCH RESULTS. Descriptive statistical analysis. Selection of regression model. Model defect testing.
Disability testCheck the phenomenon of model defect correlation. Check for variance changes. Test results by regression estimation method with standard errors in the research model. Discuss regression results.
Conclusion of chapter 4 .50 CHAPTER V SOME SOLUTIONS TO IMPROVE THE EFFECTIVENESS OF THE USE OF FINANCIAL LEVERAGE FOR BUSINESSES IN VIETNAM. Conclusion of chapter 5. iv vii LIST OF ABBREVIATIONS Abbreviation Meaning AT Asset Turnover Ratio FEM Fixed Effect Model GROW Growth rate HNX The Hanoi Stock Exchange HOSE The Ho Chi Minh Stock Exchange LIQ Liquidity OLS The smallest squared method REM Random Effect Model ROA Return on total assets ROE Return on equity SIZE Enterprise size STLEV Short-term leverage TANG Weighting of fixed assets TAX Corporate tax rate TLEV Leverage UNIQ Characteristics of the company's assets WACC Weighted Average Cost of Capital viii LIST OF TABLEAND FIGURE TABLE 3. 1 Dependent variables in the regression model.
2 Explanatory variables in the regression model. 1 The list describes the variables used in the research paper. 2 Correlation Matrix between variables. 3 VIF Variance Magnification Coefficient.
4 Regression Results by Pool OLS, FEM, REM for TLEV Dependency Variables. 7 Regression results by Pool OLS, FEM, REM for STLEV dependency variables. 10 Summary of panel data regression method. 11 Examination of similar phenomena.
12: Check for variance change. INTRODUCTION The content of chapter 1 identifies the research problem as the factors affecting the capital structure of enterprises listed on Vietnam’s stock market. Accordingly, the reasons for choosing the topic, research subjects, research objectives, research scope, research methods, research contributions and research processes are presented in detail in chapter 1. Reasons for choosing the topic Capital structure is an important issue in corporate financial management.
Therefore, the study of the structure has attracted a lot of interest from scientists in the world as well as in the country. The goal of the studies is generally to identify the factors that affect the capital structure of enterprises, consider the impact of capital structure on corporate value and propose to build a model to determine the optimal capital structure for the business. In fact, it is difficult to determine a reasonable capital structure for the company because the capital structure will change depending on the situation of each company, the growth cycle of the company. Therefore, optimizing the capital structure of companies is an important task of financial managers.
In addition, the optimal capital structure will help businesses minimize the average cost of family ownership (WACC) and maximize the value of assets of corporate shareholders. Therefore, the problem of finding the factors that affect the capital structure of companies and the impact of each factor in the business is really necessary and very useful to help managers organize, rearrange the company's capital sources through the selection and implementation of their funding decisions to achieve a reasonable capital structure, adapted to each stage of development because sometimes it can be suitable at one stage but not suitable at another. In Vietnam, there is not much research interested in the issue of optimal capital structure of joint stock enterprises. One of the main reasons is that the issue 2 of financial management in many businesses is still not taken seriously.
On the other hand, a large number of existing joint stock enterprises originated from state- owned enterprises, so these enterprises more or less inherited the obligations and interests of the old company, not caring about the efficiency of capital expenditures. However, in the face of the opportunities and challenges of the process of economic renewal, equitization of State-owned enterprises and integration with the world economy, the issue of making the most effective use of resources for development including capital resources needs to be taken care of more than ever by enterprises. For these reasons, the topic "Factors affecting the capital structure of enterprises listed on the Vietnamese stock market" is carried out with the aim of finding out the factors affecting the capital structure of enterprises in Vietnam, assessing the impact, point out inadequacies and propose solutions to improve the efficiency of using financial leverage. Overall research objectives This research paper aims to assess the extent and direction of the impact of factors affecting the capital structure of enterprises listed on the Vietnamese stock market.
Specific research objectives In order to achieve the above general goal, the thesis needs to clarify the following contents: - Survey to show the factors affecting the capital structure of listed enterprises in Vietnam. - Analyze the direction of influence and the impact of each factor on the use of financial leverage of the business. - Find out the outstanding problems of Vietnamese enterprises when using financial leverage. - Propose a number of solutions to improve the efficiency of the use of financial leverage for businesses.
Research question The thesis raises four research questions based on the aforementioned thesis objectives: 1. What factors affect the capital structure of enterprises listed on the Stock Exchange of Vietnam? 2. What is the direction of influence of these factors? 3. What are the problems that still exist in the capital structure of enterprises listed on the Stock Exchange of Vietnam? 1.
Research subject and scopes 1. Research subjec The research subjects of the topic are top 39 non-financial companies listed in Vietnam with the highest total capital as of 2021 listed on the two stock exchanges the Hanoi Stock Exchange (HNX) and the Ho Chi Minh Stock Exchange (HOSE). A total of 39 companies with 380 observations between 2012 and 2021. Research scopes The study focused on analyzing the impact of key factors affecting the capital structure of 39 non-financial companies listed on the Vietnam Stock Exchange HNX and HOSE in the period from 2012-2021.
The limitation of the topic is to focus only the sample data of companies listed on the stock exchange. In addition, the condition of the sample is that non- financial enterprises should have eliminated small-sized companies. Due to the limited time and resources in the research process, the topic only stops analyzing in large-scale enterprises, where volatility has a significant impact on the entire market. The results of the study will hopefully be a reference for financial managers, investors, investment funds.
Research contribution In terms of scientific significance, the thesis codifies and further clarifies the theoretical basis of capital structure including concepts and theories of capital structure. 4 In practical terms, the thesis goes deeply into consideration the influencing factors of the capital structure of consumer goods enterprises listed at HNX and HOSE. From the results of the study, the thesis makes recommendations to perfect the capital structure of the aforementioned enterprise 1. Research outline The structure of the topic consists of 4 chapters: Chapter 1: Introduction Chapter 2: Literature review.
Chapter 3: Methodology and data. Chapter 4: Research results and discussion of research results Chapter 5: Some solutions to improve the effectiveness of the use of financial leverage for businesses in Vietnam 5 CHAPTER II: LITERATURE REVIEW In this chapter, the author introduces the concept of capital structure, theories of capital structure, factors affecting the capital structure of enterprises listed on the Stock Exchange of Vietnam. At the same time, this chapter also summarizes previous studies on factors affecting the capital structure of enterprises listed on the stock exchange in Vietnam. Capital structure Capital structure is a topic of great interest to researchers.
The beginning of the theory of capital structure is the modigliani and miller thesis published by these two authors in 1958. Later, the theory of capital structure was further developed by the researchers. In the history of capital structure research, capital structure theories include Modigliani and Miller's theory, static trade-off theory, dynamic trade-off theory, classification order theory, and market timing theory.