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An empirical investigation of capital structure and firm value in Vietnam

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  • Vo, Xuan Vinh
  • Ellis, Craig

Abstract

This study investigates the relationship between capital structure and shareholder value in Vietnam. We use accounting and stock market data for firms listed on the Ho Chi Minh City stock exchange during the period 2007–2013. Our analysis shows a negative relation between financial leverage and shareholder value, indicative of a proportionately greater cost to debt financing than benefit for Vietnamese firms. Moreover, we find that only low leveraged firms are likely to create value for shareholders. Our study has implications for Vietnamese firm's preferred capital structure and for investors who contemplate to invest in Vietnamese stock markets.

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  • Vo, Xuan Vinh & Ellis, Craig, 2017. "An empirical investigation of capital structure and firm value in Vietnam," Finance Research Letters, Elsevier, vol. 22(C), pages 90-94.
    • Handle: RePEc:eee:finlet:v:22:y:2017:i:c:p:90-94
    DOI: 10.1016/j.frl.2016.10.014
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    More about this item

    Keywords

    Capital structure; Firm value; Abnormal returns;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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