Đang tải... (xem toàn văn)
There exists or not an optimal capital structure to every business and if so, how its af-fect to value firm is always an argumentative topic in the financial community over the past decades. Capital structure has been an important focus point in the literature since Modigliani and Miler (1958) have published their seminal research article, entitled “The cost of capital, corporation finance and theory of investment” in the American Economic Review. The M&M theory on capital structure claims that in an efficient market and in the absence of taxes, bank-ruptcy costs, and asymmetric information, the value of a firm is independent of capital struc-ture.Several theories have been developed in the attempt to arrive at one that is able to ex-plain the financing behavior of companies as well as establishing whether an optimal capital structure exists. Theories such as agency theory (Jensen & Meckling, 1976) trade-off theory (Modigliani and Miler, 1963) and Pecking order theory (Myer & Majluf, 1984; Myer, 1984), with the latter two being the most dominant, have been developed and used in the attempt to explain companies’ capital structure. The trade-off theory advances that the choice of capital structure in a firm is a result of a trade-off theory between the benefits of debt, such as those arising from interest debt tax shields, and the costs of debt, such as indirect and direct bank-ruptcy costs (Myers, 1984), whereas the pecking order theory state that companies prefer the cheapest source of funding, which due to information asymmetry, means companies prefer internal to external funding as well as debt to equity funding (Myer & Majluf, 1984). Numerous studies have carried out empirical tests of capital structure theories, trying to establish whether they could explain the capital structure of company as well as figuring out which determinants were important when considering companies’ capital structure in de-veloped countries and developing countries.By learning about the situation of Vietnam businesses, I recognized Vietnam busi-nesses does not focus on building the capital structure consistent with its business, while en-terprises in developing countries, it is the first issue to decide for the formation and develop-ment of a business.To build an appropriate capital structure, Vietnam companies need to understand in such conditions, their capital structure is subject to the impact of these factors. Our main ob-jective is to contribute to help Vietnamese businesses build an optimal structure, so I choose research question “Indentify factors that affect the capital structure, inspection in Vietnam”. This study used data from 88 non-financial companies listed on the Ho Chi Minh Stock Exchange from 2008-2012, including 88 firms has largest market value by industry. All financial data of 88 companies are derived from the financial statements on the website of these companies.
JEAN MOULIN LYON UNIVERSITY VIETNAM UNIVERSITY OF COMMERCE MASTER FINANCE AND CONTROL THESIS ON THE DETERMINANTS OF CAPITAL STRUCTURE: AN EMPIRICAL STUDY OF VIETNAMESE LISTED FIRMS Supervisor: Prof Duc Khuong NGUYEN Hanoi 2013 Acknowledgements I am very grateful to my supervisor, Prof Duc Khuong Nguyen for his encouragement, guidance and support from the start till the end of my master thesis I am also thankful to my parents for their continuous support I appreciate the help from Prof Manh Chien Vu and Prof Laurence Abadie Last but not least, I am very thankful to Prof Hoang Nguyen for his encouragement to my master degree TABLE OF CONTENTS Acknowledgements LIST OF FIGURES Executive Summary INTRODUCTION .7 1.1 BACKGROUND 1.2 RESEARCH OBJECTIVES 1.3 OUTLINE STRUCTURES LITERATURE REVIEW 2.1 CAPITAL STRUCTURE 2.2 CAPITAL STRUCTURE IN FINANCIAL THEORY .10 2.2.1 THE TRADE-OFF THEORY 10 2.2.2 THE AGENCY COST THEORY 11 2.2.3 THE PECKING-ORDER THEORY 11 2.3 EMPIRICAL EVIDENCE 12 2.3.1 EVIDENCE FROM DEVELOPING COUNTRIES .13 2.3.2 EVIDENCE FROM DEVELOPED COUNTRIES 13 2.4 OVERVIEW OF VIETNAMESE ECONOMY AND STOCK MARKETS 14 RESEARCH METHODOLOGY AND HYPOTHESIS 16 3.1 CHARACTERISTICS OF VIETNAM'S STOCK MARKET: 16 3.2 DATA COLLECTION 16 3.3 HYPOTHESIS .16 3.3.1 Firm size 17 3.3.2 Profitability 17 3.3.3 Growth 17 3.3.4 Tangibility of asset 18 3.3.5 Liquidity 18 3.3.6 State capital ratio: 18 3.4 PRACTICAL METHOD: 20 3.4.1 Dependent variable: 20 3.4.2 Independent variable: 20 3.4.3 The model: 21 EMPERICAL RESULT 22 4.1 MEAN AND MEDIAN ANALYSIS: 22 4.2 CORRELATIONS .25 4.3 EMPIRICAL FINDINGS 27 CONCLUSIONS AND RECOMMENDATIONS 31 5.1 Conclusion of the study: 31 5.2 Limitations of this study 33 REFERENCES: 34 LISTS OF 88 LISTED FIRMS ON HOSE 38 LIST OF FIGURES List of tables Table 1: Table of Hypothesis and Empirical findings Table 2: Descriptive statistic Table 3: Descriptive statistic divided by type of ownership of companies Table 4: Correlation matrix Table 5: Impact of explanatory variables on total debt to total assets Table 6: Impact of explanatory variables on short-term debt to total assets Table 7: Impact of explanatory variables on long-term debt to total assets Executive Summary There exists or not an optimal capital structure to every business and if so, how its affect to value firm is always an argumentative topic in the financial community over the past decades Capital structure has been an important focus point in the literature since Modigliani and Miler (1958) have published their seminal research article, entitled “The cost of capital, corporation finance and theory of investment” in the American Economic Review The M&M theory on capital structure claims that in an efficient market and in the absence of taxes, bankruptcy costs, and asymmetric information, the value of a firm is independent of capital structure Several theories have been developed in the attempt to arrive at one that is able to explain the financing behavior of companies as well as establishing whether an optimal capital structure exists Theories such as agency theory (Jensen & Meckling, 1976) trade-off theory (Modigliani and Miler, 1963) and Pecking order theory (Myer & Majluf, 1984; Myer, 1984), with the latter two being the most dominant, have been developed and used in the attempt to explain companies’ capital structure The trade-off theory advances that the choice of capital structure in a firm is a result of a trade-off theory between the benefits of debt, such as those arising from interest debt tax shields, and the costs of debt, such as indirect and direct bankruptcy costs (Myers, 1984), whereas the pecking order theory state that companies prefer the cheapest source of funding, which due to information asymmetry, means companies prefer internal to external funding as well as debt to equity funding (Myer & Majluf, 1984) Numerous studies have carried out empirical tests of capital structure theories, trying to establish whether they could explain the capital structure of company as well as figuring out which determinants were important when considering companies’ capital structure in developed countries and developing countries By learning about the situation of Vietnam businesses, I recognized Vietnam businesses does not focus on building the capital structure consistent with its business, while enterprises in developing countries, it is the first issue to decide for the formation and development of a business To build an appropriate capital structure, Vietnam companies need to understand in such conditions, their capital structure is subject to the impact of these factors Our main objective is to contribute to help Vietnamese businesses build an optimal structure, so I choose research question “Indentify factors that affect the capital structure, inspection in Vietnam” This study used data from 88 non-financial companies listed on the Ho Chi Minh Stock Exchange from 2008-2012, including 88 firms has largest market value by industry All financial data of 88 companies are derived from the financial statements on the website of these companies Synthesis and analysis of qualitative data combined with statistical analysis of quantitative data, comparing the results obtained with the previous results have been presented in order to clarify the research problem Tool use econometric models run on software Stata11 This study aims to help the managers and the scientists have the empirical evidence about the factors affecting on the capital structure of listed companies on the Ho Chi Minh Stock Exchange This study shows that: the factors that affect the capital structure of Vietnam firms are profitability, tangibility, size, growth, liquidity; and the factors impact on capital structure strongest is size, probability and liquidity, in which: - Relationship between capital structure and profitability is negative - Firms that are larger in size tend to have more leverage - Liquidity has negative correlation with total debt to total assets - Tang has negative correlation with short-term debt and positive correlation with long-term debt - Firms with more growth opportunities tend to have more long-term debt - State companies tend to use more leverage than other companies The negative relationships between profitability and leverage; positive relationships between growth and long-term debt are confirming the presence of Pecking-order theory in determining the financing behavior of Vietnam firms The strong positive relationships between size and leverage support the theoretical predictions of Trade-off theory In addition, the research results show the company is listed on the HCM City Stock Exchange to use less long-term debt, this can be explained by the corporate bond market in Vietnam has not found development, should be funded by businesses dependent on equity, short-term loans from banks and commercial credits Design thinking for increased funding for many businesses need to promote development of the corporate bond market Key word: “Capital structure”, “leverage”, “debt”, INTRODUCTION 1.1 BACKGROUND In finance, the capital structure is the most debatable topic and continues to keep researchers pondering Capital structure refers to mix debt and equity used by a firm in financing its assets The capital structure decision is one of the most important decisions made by financial management The capital structure decision is at the center of many other decisions in the area of corporate finance These include dividend policy, project financing, issue of longterm securities, financing of mergers, buyouts and so on One of the many objectives of corporate financial manager is to ensure the lower cost of capital and thus maximize the wealth of shareholders Capital structure is one of the effective tools of management to manage the cost of capital An optimal capital structure is reached at point where the cost of capital is the lowest Much on the empirical research on the determinants of firm’s capital structure has been directed largely towards companies listed in developed countries, such as the US, UK and Western Europe (Rajan and Zingales, 1995; Wald, 1999; Franck and Usha, 2002); little work has been done to further our knowledge of capital structure within developing countries that have different institutional structures Recently, Booth et al (2001) provided the first empirical study to test the explanatory power of capital structure models in developing countries The study used data from 10 developing countries to assess whether capital structure theory was portable across countries with different institutional structures It investigated whether the stylized facts, which were observed from the studies of developed countries, could apply only to these markets or whether they had more general applicability The results were somewhat skeptical of this premise They provided evidence that firms’ capital choice decisions in developing countries were affected by the same variables as they were in developed countries Nevertheless, there were persistent differences of institutional structure across countries indicating that specific country factors were at work Their findings suggest that although some of the insights from modern finance theory are portable across countries, much remains to be done to understand the impact of different institutional features on capital structure choices Booth et al (2001) selected countries operating a market-orientated economic system, which bore many similarities to developed countries It is interesting and important to know how capital structure theories work in a transitional economy environment within which institutional structures differ not only from developed countries but also from developing economies Vietnam is the developing and transitional economy in the world, and therefore is chosen as the focus of this study It is hoped to answer the questions as following: - The impact of firm-specific factors on the capital structure of the Vietnam firms? - What are the results that can be achieved from testing of variables indentified from theories? - What variables can be derived from the theories of capital structures? 1.2 RESEARCH OBJECTIVES In short, the purposes of the research are: (1) An overview of the theory of capital structure in order to see the importance of an optimal capital structure, the rationale for the development of the business in the long term (2) To understand the factors that affect the capital structure of a business is a lot of researchers to analyze and debate to see the direction the impact of these factors on the capital structure of a business (3) To survey and provide empirical evidence for the impact of these factors in Vietnam through surveys capital structure of listed companies on the stock exchange in Ho Chi Minh City (HOSE) in the economic model amount, then gives an overview of and practical capital structure for Vietnamese business 1.3 OUTLINE STRUCTURES The remaining part of the thesis is structured as follows Section Two offers a literature review on capital structure, capital structure in financial theory and empirical evidence, and an overview of Vietnamese economy Section Three provides research methodology; with characteristic of Vietnam’s stock market, data collection and the last discuss the practical method used in order to conduct the econometric analysis of Vietnam listed companies’ capital structures Section Four present, discuss and evaluates the findings Section Five conclusion and recommendation the study LITERATURE REVIEW 2.1 CAPITAL STRUCTURE Capital structure is the mix of financial instruments used to finance real investments by corporations Capital structure mention to the way businesses seeking financing through a combination of plans to sell shares, options to purchase shares, bonds and loans Optimal capital structure is the plan, which is now the smallest capital cost and highest stock prices A capital structure is consistent with all important decisions by businesses not only need to maximize the benefits obtained from individuals and organizations related to business and business activities, but also by the impact of this decision to the business capability of enterprises in the competitive environment Optimal capital structure involves trade-offs between costs and business benefits Financing with loan capital created "tax shield" for businesses, while reducing the level of dispersion management decisions (especially with a limited number of business opportunities and investments) The burden of debt, on the other hand training is offered to business pressures Funding from the share capital does not create user cost of capital for businesses However, shareholders may intervene in business activities operating high expectations on the efficiency of production and business investors also create considerable pressure for managers Capital structure has been an important focus point in literature since Modigliani and Miler stated publishing their research about it in 1958 and 1963, with the following assumptions: - No transaction costs - No bankruptcy costs - Firms issue only two types of claims: risk-free debt and equity - Capital markets are complete - Capital markets are competitive (individuals and firms are price takers) - No taxes Under the above set of assumptions, Modigliani and Miler showed that: - Proposition I: A firm’s total market value is independent of its capital structure - Proposition II: A firm’s cost of equity increases linearly with debt-equity ratio During the decades which have passed since the emergence of Modigliani and Miler’s propositions regarding capital structure, a vast amount of research, in somewhat different directions, have added quite a bit of new knowledge in the discussion regarding capital structure, which will be reviewed in this chapter The starting point of that will be to look at what could argued to be “mainstream” financial research in the field of capital structure, post Modigliani and Miler ... financing its assets The capital structure decision is one of the most important decisions made by financial management The capital structure decision is at the center of many other decisions... capital structure: 3.3.6 State capital ratio: State capital in the company is one of the unique features of the company is listed on the Vietnam stock market and haven’t got any theory mention to the. .. theory and the pecking-order theory 2.2.1 THE TRADE-OFF THEORY The trade-off theory explains firms? ?? choice of leverage by a trade-off between the benefits and costs of debt A trade-off of costs and