How Capital Structure Affects Firm Profitability Before And After Covid Pandemic. A Case Study Of Vietnam Retail Sector

Abstract

In today's dynamic corporate environment, businesses are engaged in a never ending struggle to properly negotiate this challenging terrain. One of the hardest and most crucial choices that the organization's management must make is the choice of the capital structure for the company. This decision is critical to maximizing sales and preserving the company's competitiveness in its specific industry (Abor, 2005). In today's changing business environment, managers must be willing to take calculated risks in order to safeguard the long-term viability of the organization (Jensen and Meckling, 1976). Managers must so thoroughly analyze the cause-and-effect linkages, develop specialized solutions, and follow a rigorous approach when deciding on the capital structure of the company. The company may be pushed to the brink of organizational collapse if this isn't done. Scholars have long examined the relationship between a company's total profitability and its debt. On the other hand, these scholars have provided a variety of viewpoints regarding how debt functions. Some have emphasized the detrimental consequences of debt on profitability (Abor, 2005), while others have highlighted the positive effects (Margrates and Psillaki, 2010). Some others have offered a patchy assortment of results (Weill, 2008). These disparities can be attributed to a variety of factors, such as the variables under investigation, variations in sample sizes that encompass a range of countries, companies, industries, and historical eras, and modifications in the employed technique. This research endeavor aspires to contribute depth to the ongoing discourse by investigating how debt shapes the profitability of businesses within the vibrant retail sector of Vietnam. Diverging from past studies that predominantly focused on particular industries or individual companies within delimited timeframes, this research takes a comprehensive standpoint. It delves into a wide array of variables to unearth the 7 influence of debt on the profitability of non-financial sector businesses operating within the Vietnamese retail industry. By examining how debt affects the profitability of enterprises within Vietnam's thriving retail sector, this research initiative seeks to add depth to the continuing discourse. Taking a broad approach, this research departs from previous studies that mostly concentrated on specific industries or individual companies during short durations. The study explores a diverse range of factors to determine the impact of debt on the profitability of non-financial sector enterprises functioning in the Vietnamese retail sector.