| dc.description.abstract | In recent decades, there has been a significant increase in both academic and
practical attention towards capital structure in the field of financial management.
Growing recognition of its potential influence on firm value has spurred research
efforts. Although recent studies indicate that capital structure may enhance company
value in some nations, the specific impact within the Vietnamese manufacturing sector
has not been thoroughly investigated. To address this gap, this research utilizes a
sample of 702 observations drawn from the HOSE and HNX stock exchanges for the
period 2020-2022. The empirical findings reveal a statistically significant inverse
correlation between capital structure, as assessed by the firm's leverage ratio, and firm
value, as assessed by Tobin’s Q ratio and PBV ratio. Additionally, firm size, firm
tangibility, and firm profitability exhibit statistically positive impacts on firm value.
Interestingly, firm liquidity shows a negative association with firm value. These results
are consistent with the expectations made by Pecking Order Theory (Myers and Majluf,
1984). The theory suggests that companies prioritize using their own funds for
financing due to the potential drawbacks and higher costs associated with borrowing
from external sources, especially in emerging nations. Higher levels of debt burden
companies with default risk, particularly in an uncertain economic environment, which
can hinder a firm's ability to meet its debt obligations. The increased risk of default
translates to potentially higher borrowing costs, further supporting the observed
negative relationship between leverage and firm value | en_US |
