MINISTRY OF EDUCATION AND TRAINING HO CHI MINH UNIVERSITY OF BANKING GRADUATION THESIS DETERMINANTS OF CAPITAL STRUCTURE OF THE RETAIL BUSINESS ENTERPRISES LISTED ON VIETNAM’S STOCK MARKET Major Finan[.]
MINISTRY OF EDUCATION AND TRAINING HO CHI MINH UNIVERSITY OF BANKING GRADUATION THESIS DETERMINANTS OF CAPITAL STRUCTURE OF THE RETAIL BUSINESS ENTERPRISES LISTED ON VIETNAM’S STOCK MARKET Major: Finance – Banking Major code: 34 02 01 NGUYỄN ANH KHOA Tai ngay!!! Ban co the xoa dong chu nay!!! ii HO CHI MINH CITY, 2023 MINISTRY OF EDUCATION AND TRAINING HO CHI MINH UNIVERSITY OF BANKING GRADUATION THESIS DETERMINANTS OF CAPITAL STRUCTURE OF THE RETAIL BUSINESS ENTERPRISES LISTED ON VIETNAM’S STOCK MARKET Major: Finance – Banking Major code: 34 02 01 Student: NGUYỄN ANH KHOA Code: 050607190203 Class: HQ7-GE05 SUPERVISOR Dr NGUYỄN DUY LINH iii HO CHI MINH CITY, 2023 iv ABSTRACT The thesis is performed in order to study the determinants of capital structure of the retail business enterprises listed on Vietnam’s stock market From the research result, recommendations or suggestions related to the act of distributing proportion of capital structure are made in order to improve the company operation’s efficiency The raw data of the research is extracted from the financial statements of 38 listed companies operating in the retail industry in the period of 2018-2022 After the collection of raw data, data for the research is calculated according to the variables that are used in the regression models On the next step, data is imported to Stata.17 to run the regression models and perform tests to find defects of the model For the result of the final model, the author used Feasible Generalized Least Squares (FGLS) estimation method to eliminate defects and ensure the model’s optimum The dependent variable is capital structure, which is represented by the financial leverage ratio The research used eight explanatory variables in the research, which are firm’s size, profitability, tangibility, growth opportunities, tax payment, non-debt tax shield, liquidity and uniqueness of product According to the result, factors that have positive effect on the changes of capital structure, which is financial leverage, are firm’s size and growth opportunities, while profitability, tangibility, non-debt tax shield and uniqueness of product influence capital structure negatively For the remaining variables tax ratio and liquidity, the relationship with financial leverage is inverse and the estimation result indicated that these two variables are statistically insignificant v TÓM TẮT Bài luận thực nhằm nghiên cứu yếu tố tác động lên cấu trúc vốn doanh nghiệp bán lẻ niêm yết thị trường chứng khoán Việt Nam Từ kết nghiên cứu, khuyến nghị liên quan đến hoạt động phân bổ cấu trúc vốn đưa nhằm nâng cao hiệu hoạt động công ty Dữ liệu thô nghiên cứu trích xuất từ báo cáo tài 38 doanh nghiệp niêm yết hoạt động lĩnh vực bán lẻ giai đoạn từ 2018-2022 Sau thu thập đầy đủ liệu thô, liệu nghiên cứu tính theo biến sử dụng mơ hình hồi quy Ở bước tiếp theo, liệu nhập vào phần mềm Stata.17 để chạy mơ hình hồi quy thực kiểm định nhằm tìm khiếm khuyết mơ hình Đối với kết cuối mơ hình, tác giả sử dụng phương pháp ước lượng Bình Phương Tối Thiểu Tổng Quát Khả Thi (Feasible Generalized Least Squares-FGLS) để loại bỏ khiếm khuyết đảm bảo tối ưu mơ hình Biến phụ thuộc cấu trúc vốn, đại diện tỉ lệ địn bẩy tài Nghiên cứu sử dụng tám biến giải thích, có kích cỡ cơng ty, khả sinh lợi, tỉ lệ tài sản cố định, hội tăng trưởng, khoản thuế phải trả, chắn thuế ngồi lãi vay, tính khoản tính riêng biệt sản phẩm Theo kết quả, yếu tố có tác động tích cực lên thay đổi cấu trúc vốn, trường hợp đại diện địn bẩy tài chính, kích cỡ cơng ty hội tăng trưởng biến khả sinh lợi, tỉ lệ tài sản cố định, chắn thuế ngồi lãi vay tính riêng biệt sản phẩm lại có tác động tiêu cực lên thay đổi cấu trúc vốn Đối với biến lại tỉ lệ thuế phải trả tính khoản, tác động hai biến lên cấu trúc vốn âm kết ước lượng cho thấy hai biến khơng có ý nghĩa thống kê vi COMMITMENT My name is: Nguyễn Anh Khoa Class: HQ7-GE05 Student code: 050607190203 Thesis topic: Determinants of capital structure of the retail business enterprises listed on Vietnam’s stock market Major in: Finance-Banking Science supervisor: Dr Nguyễn Duy Linh I am the student of Ho Chi Minh University of Banking with major in Finance and Banking The author commits the thesis with topic: “Determinants of capital structure of the retail business enterprises listed on Vietnam’s stock market” has never been submitted 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, May 2023 The author Nguyễn Anh Khoa vii ACKNOWLEGEMENT Firstly, the author would like to thank teachers in Ho Chi Minh University of Banking for all the help and support about the knowledge, academic materials, guidance of collecting data during the process of writing the thesis In particular, I would like to express my deep gratitude to my supervisor, Dr Nguyen Duy Linh for the enthusiasm, dedication in the act of educating at university Your help and meticulous guidance played an important role for me to complete the thesis in a better way Finally, I would like to thank my family, my friends, who wholeheartedly help and support me with the best possible condition to complete the graduation thesis However, due to the limitation of experience and knowledge about the field, the thesis may contain many errors The author is looking forward to receiving any comments to improve the thesis in a better way Ho Chi Minh city, May 2023 The author Nguyễn Anh Khoa viii TABLE OF CONTENTS LIST OF ABBREVIATIONS xi LIST OF TABLES xii LIST OF FIGURES xii CHAPTER INTRODUCTION 1.1 REASONS FOR CHOOSING THE TOPIC 1.2 RESEARCH OBJECTIVES 1.2.1 General objectives 1.2.2 Specific objectives 1.3 RESEARCH QUESTIONS 1.4 SUBJECT AND AREA OF RESEARCH .4 1.4.1 Research subject .4 1.4.2 Area of research 1.5 METHODOLOGY 1.6 CONTRIBUTION OF THE THESIS 1.6.1 Theoretical contribution 1.6.2 Practical contribution .5 1.7 STRUCTURE OF THE RESEARCH CHAPTER LITERATURE REVIEW 2.1 OVERVIEW OF CAPITAL STRUCTURE 2.1.1 Definition of capital structure 2.1.2 Meaning of capital structure in business 2.1.3 Measurement of enterprise’s capital structure .9 ix 2.2 THEORETICAL BACKGROUND OF CAPITAL STRUCTURE 10 2.2.1 Traditional perspective 10 2.2.2 Modigliani and Miller's theory (M&M theory) 10 2.2.3 The trade-off theory 12 2.2.4 Pecking order theory 13 2.2.5 Agency costs theory 14 2.3 DETERMINANTS OF A COMPANY’S CAPITAL STRUCTURE 15 2.4 PREVIOUS RESEARCH IN THE FIELD 24 2.4.1 Foreign studies .24 2.4.2 Domestic studies 27 SUMMARY OF CHAPTER .35 CHAPTER RESEARCH METHODOLOGY 36 3.1 RESEARCH PROCESS 36 3.2 RESEARCH MODEL 39 3.3 RESEARCH METHODOLOGY 42 3.4 DATA OF RESEARCH 46 CHAPTER RESEARCH RESULT AND DISCUSSION 48 4.1 DESCRIPTIVE STATISTIC .48 4.2 CORRELATION ANALYSIS 50 4.3 REGRESSION MODEL .52 4.3.1 Pool OLS, FEM and REM 52 4.3.2 The test’s results 53 4.4 RESEARCH RESULT 58 x SUMMARY OF CHAPTER .62 CHAPTER CONCLUSION AND RECOMMENDATIONS 63 5.1 RESEARCH CONCLUSION .63 5.2 RESEARCH RECOMMENDATIONS .64 5.3 THESIS LIMITATION AND DIRECTION OF RESEARCH 67 5.3.1 Thesis limitation 67 5.3.2 Direction of research 68 SUMMARY OF CHAPTER .69 REFERENCES 70 APPENDIX 74 APPENDIX 77 69 SUMMARY OF CHAPTER According to the regression result and previous empirical research, chapter presents the summary about the conclusion of the determinants of capital structure of the retail business enterprises listed on Vietnam’s stock market Furthermore, with the estimation result of the regression model, recommendations are made according to each variable’s estimation result in order to provide a solution with the expectation of improving the capital structure management At the end of the chapter, limitations of the thesis such as limitation of sample, explanatory variables are made along with the direction of research in order to benefit the further research 70 REFERENCES Domestic studies Dinh, H T., & Pham, C D (2020) The Effect of Capital Structure on Financial Performance of Vietnamese Listing Pharmaceutical Enterprises Journal of Asian Finance, Economics and Business Vol No (2020) 329– 340 Đoàn, A N (2010) Các nhân tố ảnh hưởng đến cấu trúc tài hiệu tài chính: tiếp cận theo phương pháp phân tích đường dẫn Tạp chí khoa học cơng nghệ, đại học Đà Nẵng, 5(40) General Statistics Office of Vietnam (2018-2022) Sum of retail revenue and consumer services Ngo, H T (2019) Determinants of capital structure of listed construction firms in Viet Nam The second international conference on the sustainable economic development and business management in the context of globalisation (trang 5-19) Financial Publishing House Nhâm, N H (2008) Giáo trình Kinh Tế Lượng Ha Noi: NXB Lao động Xã hội Trần, H T (2022) Factors affecting capital structure of steel industry enterprises listed at Ho Chi Minh Stock Exchange Master Thesis University of Economics Ho Chi Minh City (2009) Dự báo Phân Tích Dữ Liệu Kinh Tế Tài Chính NXB Thống Kê Vo, V X (2017) Determinants of capital structure in emerging markets: Evidence from Vietnam Research in International Business and Finance, 40, 105-113 71 Foreign studies Akin, A., & Rashid, K A (2020) Factors affecting the capital structure: new evidence from GCC countries Journal of International Studies, 13(1) Almuaither, S., & Marzouk, M (2019) Determinants of Capital Structure: Evidence from the UK Modern Accounting and Auditing Bhattacharjee, A., & Dash, M (2021) Determinants of Capital Structure in the Indian Cement Sector Asian Journal of Economics, Finance and Management, 1-8 Brigham, E., & Houston, J (2009) Fundamentals of Financial Management Mason: Cengage Learning Chang, C., Lee, A C., & Lee, C F (2009) Determinants of capital structure choice: A structural equation modeling approach The Quarterly Review of Economics and Finance, 49(2), 197-213 Chen, J J (2004) Determinants of capital structure of Chinese-listed companies Journal of Business research, 57(12), 1341-1351 Damodaran, A (2014) Applied Corporate Finance, Third Edition John Wilson and Sons DeAngelo, H., & Masulis, R W (1980) Optimal capital structure under corporate and personal taxation Journal of financial economics, 8(1), 3-29 Donaldson, G (2000) Corporate Debt Capacity: A study of corporate debt policy and the determination of corporate debt capacity Beard Books 10 Durand, D (1952) Costs of debt and equity funds for business: trends and problems of measurement Conference on research in business finance (pp 215-262) NBER 11 Fama, E F (1980) Agency problems and the theory of the firm Journal of political economy, 88(2), 288-307 72 12 Gujarati, D (2003) Basic Econometrics 13 Hindi, M I (1989) Financial management: contemporary analytical approach Alexandria 14 Huang, G., & Song, F M (2006) The determinants of capital structure: Evidence from China China economic review, 17(1), 14-36 15 Jensen, M., & Meckling, W (1976) Theory of the firm: managerial behavior, agency costs and ownership structure Journal of Financial Economics, 3, 350-360 16 Kennedy, P (2008) A guide to econometrics John Wiley & Sons 17 Kraus, A., & Litzenberger, R H (1973) A State-Preference Model of Optimal Financial Leverage Journal of Finance, 28(4), 911-933 18 Lim, T C (2011) Determinants of Capital Structure Empirical Evidence from Financial Services Listed Firms in China International Journal of Economics and Finance, 4(3), 191-203 19 Miller, M H., & Modigliani, F (1958) The cost of capital, corporation finance and the theory of investment The American Economic Review, 261296 20 Miller, M H., & Modigliani, F (1963) Corporate income taxes and the cost of capital: a correction The American Economic Review, 433-443 21 M'ng, J C., Rahman, M., & Sannacy, S (2017) The determinants of capital structure: Evidence from public listed companies in Malaysia, Singapore and Thailand Cogent Economics & Finance, 5(1), 1418609 22 Myers, S C (2001) Capital Structure Journal of economic perspective, 15, 81-102 73 23 Myers, S., & Majluf, N (1984) Corporate financing and investment decisions when firms have information that investors not have Journal of Financial Economics, 13, 187-221 24 Ross, S A (2009) Corporate Finance: Core principles and applications (lần xuất 2nd) New York: McGraw-Hill Irwin 25 Shahzad, S J., Janabi, A., & M A., F R (2019) Liquidity-adjusted valueat-risk optimization of a multi-asset portfolio using a vine copula approach Physica A: Statistical Mechanics and its Applications, 536, 122579 26 Shama'a, K (1989) Financial management Baghdad 27 Titman, S., & Wessels, R (1988) The Determinants of Capital Structure Choice The Journal of The American Finance Association, 43(1), 1-19 28 Wald, J K (1999) How firm characteristics affect capital structure: an international comparison Journal of Financial research, 22 (2), 161-187 74 APPENDIX List of 38 retail enterprises listed on the Vietnam’s stock market No Name of firms Code Công ty cổ phần Dịch vụ Nơng nghiệp Bình Thuận ABS Cơng ty Cổ phần Xuất nhập Nông sản Thực phẩm An Giang AFX Công ty cổ phần Thực phẩm Nông sản Xuất Sài Gịn AGX Cơng ty Cổ phần Dịch vụ Hàng không Taseco AST Công ty cổ phần Vật liệu Xây dựng Chất đốt Đồng Nai BMF Công ty Cổ phần Dịch vụ Bến Thành BSC Công ty Cổ phần Thương mại - Dịch vụ Bến Thành BTT Công ty Cổ phần Đầu tư Phát triển Công nghiệp - Thương mại Củ CCI Chi Công ty Cổ phần CENCON Việt Nam CEN 10 Công ty Cổ phần Dịch vụ Sân bay Quốc tế Cam Ranh CIA 11 Công ty Cổ phần Thương nghiệp Cà Mau CMV 12 Công ty Cổ phần Vật tư - Xăng dầu COM 13 Công ty Cổ phần Mai táng Hải Phịng CPH 14 Cơng ty cổ phần City Auto CTF 15 Công ty cổ phần Thế giới số DGW 75 16 Công ty Cổ phần Dược phẩm Hà Tây DHT 17 Công ty cổ phần Thương mại Dịch vụ Tổng hợp Cảng Hải Phịng DVC 18 Cơng ty cổ phần Phát hành sách T.P Hồ Chí Minh FHS 19 Công ty cổ phần Bán lẻ Kỹ thuật số FPT FRT 20 Cơng ty Cổ Phần Petec Bình Định GCB 21 Cơng ty Cổ phần Dịch vụ Ơ tơ Hàng Xanh HAX 22 Công ty Cổ phần Xăng dầu HFC HFC 23 Công ty cổ phần Sản xuất - Xuất nhập Thanh Hà HFX 24 CTCP Kim khí Hà Nội - VNSTEEL HMG 25 Tổng Công ty Thương mại Hà Nội - CTCP HTM 26 Công ty cổ phần Thương mại Hà Tây HTT 27 Công ty Cổ phần Xuất nhập Kiên Giang KGM 28 Công ty Cổ phần Thương mại - Đầu tư Long Biên LBC 29 Công ty cổ phần Đầu tư Thế giới Di động MWG 30 Công ty Cổ phần Nam Việt NAV 31 Công ty cổ phần Thiết bị Xăng dầu Petrolimex PEQ 32 Tổng Công ty Cổ phần Dịch vụ Tổng hợp Dầu khí PET 33 Cơng ty Cổ phần Xuất nhập Petrolimex PIT 76 34 Công ty cổ phần Thương mại Phú Nhuận PNG 35 Công ty cổ phần Dịch vụ Phân phối Tổng hợp Dầu khí PSD 36 CTCP Dịch vụ Hàng không Sân bay Tân Sơn Nhất SAS 37 CTCP Siam Brothers Việt Nam SBV 38 Công ty cổ phần Thanh Hoa - Sông Đà THS 77 APPENDIX Detail process of running descriptive analysis and regression models using STATA 17 in the study about determinants of capital structure of the retail business enterprises listed on Vietnam’s stock market in the period of 2018-2022 Step 1: Import calculated data into STATA, with data panel format Step 2: Run descriptive analysis with summarize command to designate the characteristic of the data 78 Step 3: Approach regression model with Ordinary Least Squares (OLS) model Testing for heteroskedasticity and autocorrelation of the regression model 79 P-value < 0.05: Reject Hypothesis 0, there is heteroskedasticity in the regression model P-value < 0.05: Reject Hypothesis 0, there is autocorrelation in the regression model Step 4: Test for multicollinearity with CORR and VIF instructions 80 Step 5: Run Fixed Effects model (FEM) and Random Effects model (REM) 81 Step 6: Conduct Hausman test to choose between FEM and REM 82 The Hausman test gives a chi-squared value of 0.000 With a significance level of 0.01, we cannot accept hypothesis H0 Therefore, the appropriate model to analyze the impact of independent variables on capital structure is the Fixed-effect model (FEM) Step 7: Testing for heteroskedasticity and autocorrelation of FEM If the model still possesses the defects, Feasible Generalized Least Squares (FGLS) estimation method is utilized to overcome the defects Prob>chi2 = 0, which is lower than 0.01 Therefore, at 1% significant level, we cannot accept hypothesis 0, which means FEM has heteroskedasticity Prob>F = 0.0393, which is lower than 0.05 Therefore, at 5% significant level, we cannot accept hypothesis 0, which means FEM has autocorrelation 83 Step 8: Feasible Generalized Least Squares (FGLS) estimation method is utilized to overcome the defects