Phân tích các nhân tố tác động đến cấu trúc vốn của doanh nghiệp sản xuất công nghiệp viết namtieesng anh

Rationales The main content of this thesis is researching the factors impact on the capital structure of Vietnamese industrial firms.. New contribution of the thesis In the perspective

MINISTRY OF EDUCATION AND TRAINING

FOREIGN TRADE UNIVERISTY

FOREIGN TRADE UNIVERSITY

SUPPERVISOR: ASSOC PROF, DR NGUYEN DINH THO

Reviewer 3: ASSOC PROF, DR LE THI KIM NHUNG

The thesis will be defended at

Assessment Thesis Council of Foreign Trade University

At date month year

Can refer to the thesis:

- Vietnam National Library

- Library of Foreign Trade University

INTRODUCTION

1 Rationales

The main content of this thesis is researching the factors impact on the capital structure of Vietnamese industrial firms The capital structure issue has not been defined clearly but following most academic papers in this field, within this thesis, the term of capital structure will be understood as the correlation between debt and equity in total assest of firm

In corporate administration, managing capital structure plays an extremly important role Some theories showed that it affects to the value of firm Besides that, it also affects the profitability of firm So the issue of managing capital structure is very important and need to be anaylized deeply

However, the capital structure is not running independently by the intent of the managers It would seem that there are some factors impact on capital structure

of firm So, analyzing how these factors impact on the change of capital structure is

a very significant research and it would help the directors to manage the capital structure

It also would seem that capital structure of firm varies from different industries For example, capital structure of commerce firms is different from it of heavy industrial firms So, it is necessary to focus on a specific industry to analyses Base on this view, this thesis has chosen industrial firms which plays important role

in the modernization and industrialization process of Vietnam to research

Finally, the concept of capital structure and the impact of some determinants

to the capital structure of Vietnamese firms have been studied for years In theorem research, these papers refer to almost of capital structure theories such as: trade off theory, perking order theory, agency-cost theory, signaling model theory, market timing theory… In empirical research, there have been multiple samples to be collected and analyzed, but the results seem to be different from each paper Especially, most of capital structure papers for Vietnamese firms focus mainly on the impact of determinants to the capital structure and dropt the impact of the capital structure to the value of firm This is a very important issue because it may lead to the endogenous problem among variables in the model Most of the papers

in this field in Vietnam use Fixed effect model (FEM) and Random effect model (REM) to run the regression In the theory, these two models are unable to overcome the endogenous problem So, using the model of Generalized Method of Moments (GMM) which can solve the endogenous issue could be viewed as a new solution of this thesis in the way to approach the research of determinants of capital structure

2 Literature review

This content will be show in the chapter 1 of the thesis

3 Objectives of the research

The main objective of this paper are defining and analyzing the impact of some determinants on the capital structure of industrial firms in Vietnam

4 Object and scope of the research

4.1 Objects

Objects of this research contain three issues:

- Theories of capital structure

- Theories of impacts of some determinants on capital structure

- Empirical studies about the impacts of some determinants on capital structure

- Industrial firms in Vietnam

4.2 Scope of the research

Scope of the research is limit in some issues:

- In the content of capital structure theories: this thesis mentions some key fundamental theories about capital structure and impacts or some determinants on capital structure

- In the content of impacts of some determinants on capital structure, this thesis approaches the problem by clarifying the determinants into two categories: (1) business factors and (2) corporate governance factors

- Firms in research sample: audited financial report of 95 Vietnamese listed industrial firms in period of 2006 – 2015

5 Methodology

Following most of economic researches, this thesis uses simultaneously two study methods: qualitative method and quantitative method to complete the objectives of the thesis

6 New contribution of the thesis

In the perspective of science, this thesis contributes some points as: (1) this

thesis runs empirical studies for impacts of determinants on capital structure (2) this thesis uses two models for studying the impacts of some determinants on capital structure, the first one uses business factor variables and the other uses corporate governance factor variables, (3) This thesis use GMM model which could be viewed as a new economic methodology in Vietnam, (4) Mentioning the optimum capital structure for Vietnamese industrial companies by running the threshold regression model, (5) This thesis focuses on Vietnamese industrial companies, which could be the leading team in the economic growth of Vietnam

In the perspective of practical application, this thesis makes some new

points as: (1) providing the actual view of capital structure of Vietnamese industrial firms to the managers, (2) showing the ways how the capital structure affects the firm’s value, then suggesting some solutions for the managers to improve the firm’s value, (3) showing the determinants of capital structure then giving some advices for the directors to manage capital structure

7 Dissertation Structure

Apart from the Forewords, Conclusion, Appendix, Reference and lists, this dissertation contains 6 chapters

Chapter 1: Literature review

Chapter 2: Theories of capital structure and impact of determinants on capital structure

Chapter 3: The actual status of capital structure of Vietnamese industrial firm Chapter 4: Data description, research models and methodology

Chapter 5: Analyzing the regression result of impact of determinants on capital structure model

Chapter 6: Solutions and recommendations to improve capital structure policy

of Vietnamese industrial firms

Chapter 1: Literature reviews of determinants of capital structure

1.1 Literature reviews of business factors impact on capital structure

1.1.1 Some important international studies

1.1.1.1 In the period of before 2000

Survey of Harris and Raviv (1991), which summarizes the empirical results

in the studies of: Bradley (1984), Long and Malitz (1985), Kester (1986), Marsh (1982) and Titman and Wessels (1988) shows the specific finding as below:

Table 1.1: Summary of how business factor impact on capital structure in

some empirical studies before 2000

et al

Long and Malitz

Kester Marsh

Titman and Wessels

Source: Survey of Harris and Raviv (1991)

In the above table, the plus mark represents the positive relationship, minus marks show the negative relationship, blank gap show the paper do not sdudy these factors, * mark may show the correlation level but without any statistic meanings

1.1.1.2 Some important studies after 2000

Some important studies in this period are: Huang and Song (2006), Chen (2003), Pandey (2002) and some other studies

1.1.2 Some important studies in Vietnam

small and medium business

1.1.2.2 The research of Doan Ngoc Phi Anh (2010) with path analysis model

trade-off theory

1.1.2.4 The research of Le Dat Chi (2003) and the perking order theory

1.1.2.5 The research of Le Thi Phuong Vi and Phan Thi Bich Nguyet for the

state-owned factor impact on the capital structure of firm

1.1.2.6 The research of Dang Thi Quynh Anh and Quach Thi Hai Yen (2014) for the

determinants of the capital structure of firms listed in HOSE

1.1.2.7 The research of Tran Hung Son (2012) for the study sample with

Vietnamese industrial firms

1.1.3 Summary of how business factors impact on capital structure in some

empirical studies

Table 1.2: Summary of determinants of capital structure in some empirical studies

Firm size Positive

Titman and Wessels (1988), Antonio, Guney and Paudyal (2002), Hall, Hutchison, Michaels (2004), Deesomsak (2004), Huang and Song (2006), Pandey (2002), Frank and Goyal (2007), Doan Ngoc Phi Anh (2010), Okuda and Lai Thi Phuong Nhung (2010), Dang Thi Quynh Anh and Quach Thi Hai Yen (2014)

Profitability Positive Erol (2004), Pandey (2002), Dang Thi Quynh Anh and

Quach Thi Hai Yen (2014)

Negative

Meyrs and Majluf (1984), Kester (1986), Thies and Klock (1992), Titman and Wessels (1988), Chen (2003), Hall, Hutchison, Michaels (2004), Deesomsak (2004), Tran Dinh Khoi Nguyen (2006), Pandey (2002), Doan Ngoc Phi Anh (2010), Okuda and Lai Thi Phuong Nhung

(2010)

Growth

Opportunity

Positive / Negative

Myers (1977), Chen and Zhao (2006), Pandey (2002),

Frank and Goyal (2007)

Growth Speed

Negative Titman and Wessels (1988), Pandley (2002)

Tangibility

Positive Chen (1998), Pandley (2002), Chen (2003), Huang and

Song (2006), Tran Hung Son (2012)

Negative Huang and Song (2006) Tran Dinh Khoi Nguyen and

Ramachandran (2006), Doan Ngoc Phi Anh (2010)

Volatility

Negative

Pandly (2002), Huang and Song (2001), Bradley et al (1984), Titman and Witsell (1988), Huang and Song (2006), Pandey (2002), Doan Ngoc Phi Anh (2010)

Positive Tran Dinh Khoi Nguyen and Ramachandran (2006)

Relationship

with bank Positive

Petersen and Rajan (1994), Donnelly, Berry, and Thompson (1985), Tran Dinh Khoi Nguyen and

Ramachandran (2006)

Corporate

income tax

Negative Tran Hung Son (2012), Dang Thi Quynh Anh and

Quach Thi Hai Yen (2014)

1.2 Literature reviews of business factors impact on capital structure

1.3 Literature reviews of corporate governance factors impact on capital structure

There are some important studies in this topic such as: Ahmad et al (2015), Agyei et al (2014), Jaradat (2015), Tran Dinh Khoi Nguyen and Ramachandran (2006),

Le Thi Phuong Vy and Phan Bich Nguyet (2015)

Table 1.3: Summary of how corporate governance factors impact on capital

structure in some empirical studies

capital structure Some important studies

The board size

Positive Ahmad and et al.(2015), Agyei and et al

Doan Ngoc Phi Anh (2010)

Gender structure of board Positive Jaradat (2015) and Agyei and et al.(2014)

Non executive member in

board Positive Agyei and et al.(2014), Jaradat (2015)

2 Defining research objectives

After analyzing the literature review, this thesis defines some issues need to

be studied more such as:

Firstly, for the concept of affects by some factors to the capital structure of

Vietnamese industrial firms, the thesis needs to approach by two categories of factors: (1) business factors and (2) corporate governance factors

Secondly, the literature review shows that the relationship between capital

structure and ROA/ROE/TobinQ indicators is endogenous So, the GMM model need

to be used to replace FEM and REM model

Last, the overview shows that the endogenous relationships between capital

structure and profitability could be exist, so to solve this issue, using GMM model could be more suitable rather than using FEM and REM models

CHAPTER 2: THEORIES OF CAPITAL STRUCTURE, IMPACT OF CAPITAL STRUCTURE ON FIRM VALUE AND IMPACT OF DETERMINANTS ON CAPITAL STRUCTURE

2.1 The definition and measurements of Capital structure

In the study of Bui Van Van et al (2015), the definition of capital structure is defined: capital structure is the concept shows the correlation of parts in total capital

of firm The total capital of firm is divided into two parts: debt and equity The term

of debt are also divided into two parts basing on the borrowing time: short term debt and long term debt In this thesis, some terms of capital structure are referred as: total debt ratio, long term debt ratio, short term debt ratio, long term capital ratio and equity ratio

The measurement of above terms is:

Total debt ratio = Total debt / total asset

Equity ratio = Total equity / Total asset

Short term debt ratio = Short term debt / Total asset

Long term debt ratio = Long term debt / Total asset

Long term capital ratio = (Equity + long term debt)/ Total asset

2.2 The fundamental theories of capital structure

2.2.1 Modigliani and Miller theory

2.2.1.1 Modigliani and Miller (1958)

2.2.1.2 Modigliani and Miller (1963)

2.2.2 The static trade of theory and optimum capital structure 2.2.3 Jensen and Meckling theory about agency cost

2.2.4 The perking order theory of Myers and Majluf

2.2.5 The market timing theory

2.2.6 The theories of signaling, risk avoided philosophy, and others

2.3 Literature review of determinants of capital structure

2.3.1 Impact of business factors on capital structure

2.3.1.1 Impact of size factor on capital structure

2.3.1.2 Impact of profitablitily factor on capital structure

2.3.1.3 Impact of growth opporturnity factor on capital structure

2.3.1.4 Impact of growth speed factor on capital structure

2.3.1.5 Impact of tangibility factor on capital structure

2.3.1.6 Impact of volatility factor on capital structure

2.3.1.7 Impact of liquidity factor on capital structure

2.3.1.8 Impact of tax factor on capital structure

2.3.1.9 Impact of interest factor on capital structure

2.3.1.10 Impact of crisis factor on capital structure

2.3.2 Impact of corporate governance factors on capital structure

2.3.2.1 Impact of board size factor on capital structure

2.3.2.2 Impact of CEO Duality factor on capital structure

2.3.2.3 Impact of institutional ownership factor on capital structure

2.4 The fundamental issues on managing capital structure

2.4.1 The rules for managing capital structure

2.4.1.1 Rule for controlling the compatibleness

This rule is understood that the long term capital should be used to fund the long term asset like the fixed asset, and the short term capital should be used for funding the short term asset like materials, stocks…

2.4.1.2 Rule for balancing the benefit and risk

2.4.1.3 Rule for maintain the right to control company

2.4.1.4 Rule of flexibility

2.4.1.5 Rule of minimization cost of capital

2.4.2 The key issues for using rules in managing capital structure of industrial

firms

2.4.2.1 The context of national economy and capital market

2.4.2.2 The context of industry sector

2.4.2.3 Characteristics of industrial firms

CHAPTER 3: THE ACTUAL FACTS OF CAPITAL STRUCTURE

OF VIETNAMESE INDUSTRIAL FIRMS

3.1 Review of Vietnamese industry sector

The growth speed of industry sector of Vietnam has been maintained around 7% per year since 2005 However, this sector has been accounted for around 38% of GDP for years

3.2 The actual facts of capital structure of Vietnamese industrial firms in comparison with non financial listed firms in Vietnam

3.2.1 Most of Vietnamese industrial firms follow the rule of compatibleness

3.2.2 The total debt ratio of Vietnamese industrial firms is lower than the

ratio of non financial listed firms

3.2.3 The long term debt ratio of Vietnamese industrial firms is lower than

the ratio of non financial listed firms and getting lower

3.2.4 There are differences in the movement of short term debt ratio of

Vietnamese industrial firms and non financial listed firms in Vietnam 3.2.5 There are differences in the movement of short term debt ratio of and

long term debt ration of Vietnamese industrial firms

3.2.6 Vietnamese industrial firms are borrowing short term debt more than

long term debt

3.2.7 The relationship among capital structure and economy crisis and

interest rate

The economy crisis in the period 2008 – 2011 with two shock of interest rate

in 2008 and 2011 could not show any significant impact on capital structure of Vietnamese industrial firms but may impact on ROA

3.2.8 There are differences between capital structure of state owned

companies and private companies

3.2.9 The relationship between ROA and capital structure of Vietnamese

3.2.11 The relationship between the liquidity and capital structure

3.3 The summary of actual facts of capital structure of Vietnamese industrial firms

The advantage point in capital structure status of Vietnamese industrial firms

is the compatibleness, but it also show some disadvantages such as: (1) the issue of