The Determinants of Capital Structure: An Empirical Study of Listed Firms on the Vietnamese Stock Exchange

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Since the appearance of the pioneering work of Modigliani and Miller (1958, 1963) has created a system of theoretical foundations of corporate finance theory. There have been numerous studies to clarify the Modigliani and Miller theory, but most of empirical studies have been carried out in the developed countries and few studies are mentioned in the context of developing countries. This paper will attempt to fill the gap of the determinants of capital structure in developing countries through conducting an empirical analysis of capital structure of listed companies in Thailand, Malaysia, China and Vietnam. In addition, this study will address the impact of ownership structure of the capital structure of enterprises in Vietnam. Indeed, the capital structure of Vietnamese enterprises has a number of features that are different to other countries. These differences come from the specific characteristics of the economy and capital structure of Vietnam, where most of companies belong to state. However, along with the shift from a centralized economy to the market-oriented economy there is growing participation by privately owned companies and foreigners as shareholders in Vietnam companies. This study will use panel data for listed companies from the countries Thailand, Malaysia, China and Vietnam in the period from 2004 to 2009. Capital structure and firm attributed information will be collected from the Data Stream, Thomson Reuters and Osiris databases. To analyze these data, econometric methods such as ordinary least squares (OLS) and generalized method of moments (GMM) will be used to explore the relationship between financial factors as well as non-financial factors and capital structure choice. Based on the findings, there will be comparisons between countries as well as explanations for the similarities and differences.