The impact of capital structure on firm performance in seafood processing industry in Vietnam
Abstract
This study seeks to investigate the effect of capital structure on firm performance by analyzing the relationship between firm performance of seafood processing companies listed on HOSE, measured by return on asset (ROA) and return one equity (ROE) and earning per share (EPS) with short-term debt ratio(STD), and debt ratio(TD). I used two control variables which found by most literature to have influence on firm performance, namely, size and growth opportunity.
The sample of this study cover 17 seafood company listed on HOSE. The data is collected in five years from 2007 to 2011. A series of regression analysis were executed for each model. The study finds that STD and TD have significant relationship with ROA while EPS has significant on TD, but have no relationship with STD. I also found that there is an optimal capital structure for these companies at 46.57% debt ratio.
In order to ensure and enhance the firm performance, seafood processing companies should use optimal less than 46.57% debt ratio.
Key words: Capital structure, Firm performance, Seafood processing companies