Investment expenditures : Sources of financing under political socioeconomy - A study of listed companies on Ho Chi
Abstract
By means of accounting data and political connection of listed non-financial
firms on the Ho Chi Minh stock exchange, this study documents that HOSE-listed
companies still especial financial constraints to both internal and external finance, even
after the renovation and rapid growth of equity markets since 1990s and the strong
privatization trend in 2010s. The investment expenditures sensitivity for private firms are
significantly high to all aspects of internal and external finance. This study also uncovers
that firms who locate in major cities, operate in non-regulated industries and belong to the
medium size face especially financial constraints. Meanwhile, it is discovered that
government-tied enterprises such as SOEs and regulated-industry firms demonstrate an
almost-absolute dependency on bank loans, signaling the existence of credit misallocation
in Vietnam.