Determinants of firm growth - Evidence in manufacturing companies listed on Ho Chi Minh stock exchange
Abstract
The purpose of this study is to explore the main determinants of fỉrm growth in
developing countries – Vietnam. The important role of understanding firm growth in
transition economies has attracted the recent attention of academics and policy makers
but remains relatively unexplored. Empirical researches have suggested that firm
growth is determined by the traditional characteristics of size and age and other firm
specific factors such as indebtedness, internal financing, future growth opportunities,
product innovation, and change in organizational . Using a panel dataset of 96
manufacture firms listed on Ho Chi Minh Stock exchange from 2009 to 2013, we find
that firm size when measured by firm total assets cannot explain the firm growth in
case of Vietnam and also, it is consistent with Gibrat Law (1931) which stated that
growth rate and the size of firms were independent. Firm specific characteristics such
as leverage, current liquidity, internally generated funds, and labor productivity are
found to be important factors in determining a firm’s growth and performance. Age
and GDP do not seem to be able to explain firm growth.