Determinants of working capital investment : Evidence from Vietnam public firms on Ho Chi Minh stock exchange (HOSE)
Abstract
Capital liquidity problem is concerned by many researchers over the world.
Especially, after the global financial crisis in 2007, this issue raised more awareness for
many economies. Challenge is to stand steady through difficulty. From the perspective
of short-term assets management which is very essential in overall financial
management, this study is carried out to examine framework of working capital driving
factors through development of its determinants. While there are widely conducted in
the world, by taking evidence from 288 listed companies in Ho Chi Minh Stock
Exchange (HOSE), this study will give view of developing economies among which
Vietnam is a special case.
Due to the sampling approach, panel data regression techniques are
employed to find the relationships between independent variables and the dependent
variable. Eight factors are involved into the test. These includes: leverage, firm’s size,
immediate growth opportunities, asset tangibility, level of information asymmetry,
profitability, operating cash flow, economic condition. Independent variables are
measured by different proxies. Through the result of researched model, smaller firms
that have lower leverage degree, lower revenue growth rate, lower asset tangibility,
faced less degree of information asymmetry, and have higher return on assets tended to
have higher level of working capital investment.
Keyword: working capital investment, leverage, size, growth opportunities,
asset tangibility, asymmetric information, profitability, operating cash flow, real GDP.