Capital Structure and Firm Performance: Case Study: Listed Companies in Hochiminh Stock Exchange

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MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY --- oOo ---

HUỲNH ANH KIỆT

CAPITAL STRUCTURE AND FIRM PERFORMANCE: CASE STUDY: LISTED COMPANIES IN HOCHIMINH STOCK EXCHANGE

MASTER THESIS

Ho Chi Minh City – 2010

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HOCHIMINH CITY --- oOo ---

HUỲNH ANH KIỆT

CAPITAL STRUCTURE AND FIRM PERFORMANCE: CASE STUDY: LISTED COMPANIES IN HOCHIMINH STOCK EXCHANGE MAJOR: BUSINESS ADMINISTRATION MAJOR CODE: 60.34.05

MASTER THESIS
INSTRUCTOR : PROFESSOR NGUYỄN ĐÔNG PHONG

Ho Chi Minh City – 2010

ACKNOWLEDGEMENT
I would like to express my deepest gratitude to my research Instructor, Professor Nguyen Dong Phong for his intensive support, valuable suggestions, guidance and encouragement during the course of my study. My sincere thanks are also due to Dr. Vo Thi Quy and Dr. Tran Ha Minh Quan for their valuable time as the members of the proposal examination committee. Their comments and constructive suggestions were of great help in my completing this study. My sincere thanks is extended to Assistant Professor Nguyen Dinh Tho, Dr. Tran Ha Minh Quan, Dr. Truong Tan Thanh, Dr. Pham Huu Hong Thai, Dr. Bui Thanh Trang for their valuable time as members of examination committee. Their comments and suggestions were of great value for my study. I would like to express my sincere gratitude to all of my teachers at Faculty of Business Administration and Postgraduate Faculty, University of Econimics Hochiminh City for their teaching and guidance during my MBA course. I would like to specially express my thanks to all of my classmates, my friends from www.caohockinhte.vn for their support and encouragement. I would also like to avail this opportunity to express my appreciation to Professor Nguyen Dong Phong, UEH Board of Directors for creating MBA program in English and Dr. Tran Ha Minh Quan for his support during the course. Finally, I heartily dedicate this study to my beloved parents and my wife, Vu Thi Huyen who have always sacrificed to encourage and support me during my study.

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ABSTRACT

This study investigates the relationship between firm capital structure and firm performance. The author explores both the effect of firm performance on firm captial structure as well as the effect of capital structure on firm market performance using cross-sectional data representing of 162 Vietnamese companies in Hochiminh Stock Exchange for 2008. According to the results, a firm profitability is found to have a significant and negative impact on all firm capital structure. This finding support pecking order theory of Myers and Majluf (1984). An interesting finding is that firm size has a positive and significant impact on the leverage, which consistent with a previous study of Rajan and Zingales (1995), and indicating that a firm size is an important determinant of corporate capital structure. Firm capital structure is confirmed to have positive and significant impacts on firm market performance which is measured by Tobin’s Q. The author also finds that firm growth opportunities have a positive and significant impact on the firm value Tobin’s Q.

Keywords: Capital structure, corporate performance, Vietnam, HOSE.

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TABLE OF CONTENTS
ACKNOWLEDGEMENT .............................................................................................................i ABSTRACT .................................................................................................................................. ii TABLE OF CONTENTS ............................................................................................................ iii LIST OF FIGURES .......................................................................................................................v LIST OF TABLES ........................................................................................................................vi ABBREVIATIONS...
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