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Open AccessArticle

An Empirical Test of Capital Structure Theories for the Vietnamese Listed Firms

1
Vietnam—The Netherlands Economics Program, Ho Chi Minh City 7000, Vietnam
2
Business and Economics Research Group, Ho Chi Minh City Open University, Ho Chi Minh City 7000, Vietnam
*
Author to whom correspondence should be addressed.
J. Risk Financial Manag. 2019, 12(3), 148; https://doi.org/10.3390/jrfm12030148
Received: 12 April 2019 / Revised: 2 August 2019 / Accepted: 2 August 2019 / Published: 10 September 2019
(This article belongs to the Special Issue Contemporary Issues in Business and Economics)
Raising capital efficiently for the operations is considered a fundamental decision for any firms. Since the 1960s, various theories on capital structure have been developed. Various empirical studies had also been conducted to examine the appropriateness of these theories in different markets. Unfortunately, evidence is mixed. In the context of Vietnam, a rising powerful economy in the Asia Pacific region, this important issue has been largely ignored. This paper is conducted to provide additional evidence on this important issue. In addition, different factors affecting the capital structure decisions from the Vietnamese listed firms are examined. The Generalized Method of Moment approach is employed on the sample of 227 listed firms in Ho Chi Minh City stock exchange over the period from 2008 to 2017. Findings from this study suggest that the Vietnamese listed firms follow the trade-off theory to determine their capital structure (i.e., to determine the optimal debt level). In contrast, no evidence has been found to confirm that the pecking order theory can explain the financing decisions of the Vietnamese listed firms, as previously expected. In addition, findings from this study also indicate that ‘Fund flow deficit’ and ‘Change in sales’ are the most two important factors that affect the amount of debt issued for the Vietnamese listed firms. Implications for academics, practitioners, and the Vietnamese government have also been emerged from the findings of this paper. View Full-Text
Keywords: pecking order theory; trade off theory; capital structure; GMM; Vietnam pecking order theory; trade off theory; capital structure; GMM; Vietnam
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MDPI and ACS Style

Nguyen, H.H.; Ho, C.M.; Vo, D.H. An Empirical Test of Capital Structure Theories for the Vietnamese Listed Firms. J. Risk Financial Manag. 2019, 12, 148. https://doi.org/10.3390/jrfm12030148

AMA Style

Nguyen HH, Ho CM, Vo DH. An Empirical Test of Capital Structure Theories for the Vietnamese Listed Firms. Journal of Risk and Financial Management. 2019; 12(3):148. https://doi.org/10.3390/jrfm12030148

Chicago/Turabian Style

Nguyen, Hoang H.; Ho, Chi M.; Vo, Duc H. 2019. "An Empirical Test of Capital Structure Theories for the Vietnamese Listed Firms" J. Risk Financial Manag. 12, no. 3: 148. https://doi.org/10.3390/jrfm12030148

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Note that from the first issue of 2016, MDPI journals use article numbers instead of page numbers. See further details here.

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