The Impact of Financial Structure on Profitability: Empirical Evidence from Vietnam’s Construction Sector
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Keywords

Financial structure, Trade-off theory, Pecking order theory, Agency theory, Firm’s profitability, Construction sector, Vietnamese economy, Statistical modelling.

How to Cite

Nga, P. T. ., & Nguyen, T. . (2020). The Impact of Financial Structure on Profitability: Empirical Evidence from Vietnam’s Construction Sector. Asian Economic and Financial Review, 10(9), 1028–1036. https://doi.org/10.18488/journal.aefr.2020.109.1028.1036

Abstract

The purpose of this study is to empirically investigate the impact of financial structure—the balance between a firm’s liabilities and equities—on profitability, based on a sample of listed construction companies in Vietnam. Following a literature review, the hypothesis that there is a positive relationship between financial structure and profitability was formulated and tested through pooled ordinary least square, fixed effects, and random effects models. The empirical results revealed that the total, short-term, and long-term debt ratios exert a negative impact on profitability, while asset tangibility, inventory ratios, and growth rate, as well as size and age of firm all positively affect profitability; however, short-term receivable ratios had no effect. These findings contribute empirical evidence, in the context of emerging economies, to the existing body of literature.

https://doi.org/10.18488/journal.aefr.2020.109.1028.1036
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