Browse > Article
http://dx.doi.org/10.13106/jafeb.2021.vol8.no7.0469

The Impact of Capital Structure on Firm's Profitability: A Case Study of the Rubber Industry in Vietnam  

CO, Huong Thi Thanh (Industrial University of Ho Chi Minh City (IUH))
UONG, Trang Thi Mai (Office of the National Council for Education and Human Development, Ministry of Education and Training)
NGUYEN, Cong Van (Industrial University of Ho Chi Minh City (IUH))
Publication Information
The Journal of Asian Finance, Economics and Business / v.8, no.7, 2021 , pp. 469-476 More about this Journal
Abstract
This study aims to examine and measure the impact of capital structure on the profitability of companies in emerging markets. The research sample includes eighteen rubber companies listed on the Vietnam stock exchange from 2015-2019. After collecting the research data, it was imported into excel to calculate the criteria for the research model. By using Stata 16 software, the study selected a data processing model and evaluated the relevance of the regression analysis model. The research results show that the profitability of listed rubber companies in Vietnam (measured by return on equity (ROE) has a positive relationship with the debt-to-asset ratio but has a negative relationship with the long-term debt-to-asset ratio. The results also show a positive impact of firm size and revenue growth on profitability while liquidity and the ratio of tangible fixed assets to total assets do not affect significantly. These results are consistent with most of the previously published studies. However, in contrast to many previous studies, our study shows that the long-term debt-to-assets ratio has a negative effect on profitability while the debt-to-asset ratio has a positive effect. This is entirely consistent with the characteristics of long-term debt use in emerging markets.
Keywords
Capital Structure; Debt to Asset; Long-term Debt to Assets; Profitability; Short-term Debt to Asset; Vietnam;
Citations & Related Records
연도 인용수 순위
  • Reference
1 Shubita, M. F., & Alsawalhah, J. M. (2012). The relationship between capital structure and profitability. International Journal of Business and Social Science, 3(16), 104-112. http://ijbssnet.com/journals/Vol_3_No_16_Special_Issue_August_2012/12.pdf
2 Khan, A. G. (2012). The relationship of capital structure decisions with firm performance: A study of the engineering sector of Pakistan. International Journal of Accounting and Financial Reporting, 2(1), 245-262. https://doi.org/10.5296/ijafr.v2i1.1825   DOI
3 Abor, J. Y. (2007). Debt policy and performance of SMEs: Evidence from Ghanaian and South African firms. Journal of Risk Finance, 8(4), 364-379. https://doi.org/10.1108/15265940710777315.   DOI
4 Ebaid, I. E. S. (2009). The impact of capital structure choice on firm performance: Empirical evidence from Egypt. The Journal of Risk Finance, 10(5), 477-487. https://doi.org/10.1108/15265940911001385   DOI
5 Elkelish, W. W., & Marshall, A. (2007). Financial structure and firm value: Empirical evidence from the emerging market of the United Arab Emirates. International Journal of Business Research, 7(1), 58-69. https://ssrn.com/abstract=741285
6 Gambo, E. M. J., Abdul-Rahman, A., & Ahmad, M. M. (2016, 12). Capital structure and firm performance in the Nigerian cement industry. Archives of Business Research, 4(6), 30-44. https://doi.org/10.14738/abr.46.2367   DOI
7 Herciu, M., & Ogrean, C. (2017). Does capital structure influence company profitability? Studies in Business and Economics, 12(3), 50-62. https://doi.org10.1515/sbe-2017-0036   DOI
8 Addae, A. A., Nyarko-Baasi, M., & Hughes, D. (2013). The Effects of Capital Structure on Profitability of Listed Firms in Ghana. European Journal of Business and Management, 5(32), 2015-2030. https://core.ac.uk/download/pdf/234625161.pdf.
9 Gill, A., Biger, N., & Mathur, N. (2011). The effects of capital structure on profitability: Evidence from the United States. International Journal of Management, 28(4), 3-15. https://www.researchgate.net/publication/281004540
10 Alqirem, R., Afifa, M. A., Saleh, I., & Haniah, F. (2020, 12 30). Ownership structure, earnings manipulation, and organizational performance: The case of Jordanian Insurance Organizations. The Journal of Asian Finance, Economics, and Business, 7(12), 293-308. https://doi.org/10.13106/jafeb.2020.vol7.no12.293   DOI
11 Qayyum, N. U., & Noreen, U. (2019, 11 30). Impact of capital structure on profitability: A comparative study of Islamic and conventional banks of Pakistan. The Journal of Asian Finance, Economics, and Business, 6(4), 65-74. https://doi.org/10.13106/jafeb.2019.vol6.no4.65   DOI
12 Chechet, I. L., & Olayiwola, A. B. (2014). Capital structure and profitability of Nigerian quoted firms: The agency cost theory perspective. American International Journal of Social Science, 3(1), 139-158. http://www.aijssnet.com/journals/Vol_3_No_1_January_2014/13.pdf
13 Dawar, V. (2014). Agency theory, capital structure and firm performance: Some Indian evidence. Managerial Finance, 40(12), 1190-1206. https://doi.org/10.1108/MF-10-2013-0275   DOI
14 Thuy Chung, M. (2021, 4 26). Integration. http://vinanet.vn/cong-nghiep-cha/xuat-khau-cao-su-quy-12021-tang-103-kimngach-741017.html
15 Vu, D. N. (2021, 1 30). Agricultural finance. etime.danviet.vn: https://etime.danviet.vn/xuat-khau-cao-su-nam-2020-tangphan-lon-nho-thi-truong-trung-quoc-trien-vong-2021-thenao-2021013014302127.htm
16 Zeitun, R., & Tian, G. G. (2007, 12). Capital structure and corporate performance: Evidence from Jordan. Australasian Accounting Business & Finance Journal, 1(4), 40-60. http://dx.doi.org/10.2139/ssrn.2496174   DOI
17 Javed, T., Younas, W., & Imran, M. (2019, 9). Impact of capital structure on firm performance: Evidence from Pakistani firms. International Journal of Academic Research in Economics and Management Sciences, 3(5), 28-52. https://doi.org/10.6007/IJAREMS/v3-i5/1141   DOI
18 Abor, J. Y. (2005). The effect of capital structure on profitability: An empirical analysis of listed firms in Ghana. The Journal of Risk Finance, 6(5), 438-445. https://doi.org/10.1108/15265940510633505.   DOI
19 Ahmad, Z., Abdullah, N. M., & Roslan, S. (2012, 7). Capital structure effect on firms performance: Focusing on consumers and industrials sectors on Malaysian firms. International Review of Business Research Papers, 8(5), 137-155. https://doi.org/10.1.1.458.8815   DOI
20 Nguyen, L. T., & Nguyen, C. V. (2020, 1 30). The determinants of profitability in listed enterprises: A Study from Vietnamese Stock Exchange. The Journal of Asian Finance, Economics, and Business, 7(1), 47-58. https://doi.org/10.13106/jafeb.2020.vol7.no1.47   DOI
21 Sheikh, N. A., & Wang, Z. (2013, 11 25). The impact of capital structure on performance: An empirical study of non-financial listed firms in Pakistan. International Journal of Commerce and Management, 23(4), 354-368. https://doi.org/10.1108/IJCoMA-11-2011-0034   DOI
22 Ngo, T. V., Tram, H. T., & Vu, T. B. (2020, 11 30). The impact of debt on corporate profitability: Evidence from Vietnam. The Journal of Asian Finance, Economics, and Business, 7(11), 835-842. https://doi.org/10.13106/jafeb.2020.vol7.no11.835   DOI
23 Salim, M., & Yadav, R. (2012, 12). Capital structure and firm performance: Evidence from Malaysian listed companies. Procedia - Social and Behavioral Sciences, 65, 156-166. https://doi.org/10.1016/j.sbspro.2012.11.105   DOI
24 San, O. T., & Heng, T. B. (2011, 2). Capital structure and corporate performance of Malaysian construction sector. International Journal of Humanities and Social Science, 1(2), 28-36. http://www.ijhssnet.com/journal/index/27
25 Ali, A., & Faisal, S. (2020, 7 30). Capital structure and financial performance: A case of Saudi Petrochemical Industry. Journal of Asian Finance, Economics, and Business, 7(7), 105-112. https://doi.org/10.13106/jafeb.2020.vol7.no7.105   DOI