Thi Hong An Thai

Composition of the Jury

Abstract

The first article resulting from this dissertation seeks to explore the determinants of the capital structure of publicly traded Vietnamese companies. Empirical analyses show that the proportion of public investment has a nonlinear impact on firms’ debt ratios, taking the form of an inverted U-curve. Furthermore, our empirical results show that the proportion of foreign investment is negatively associated with the debt ratio of Vietnamese firms, whether it be the short-term debt ratio or the total debt ratio. The same relationship is observed for the proportion of investment by major shareholders. The second study aims to explore new aspects of the issue of the speed of adjustment to the target, optimal capital structure of publicly traded Vietnamese firms. To examine this issue, we adopt a partial adjustment model. The framework adopted is that of trade-off theory, according to which firms readjust their leverage by comparing the costs and benefits of adjustment, which leads to heterogeneity in capital structure as well as in the speed of adjustment. To gain a detailed understanding of the adjustment mechanism, this study examines different subsamples of firms, depending on whether their debt levels are above or below the target, close to or far from the target. Our results show a high degree of heterogeneity in firms’ adjustment behavior, which is consistent with trade-off theory. The final study in the dissertation analyzes the adjustment of firms’ capital structure over their life cycle, focusing on Vietnamese companies from 2005 to 2017. The results show that the speed of adjustment relative to the target leverage ratio varies significantly across the five phases of a firm’s life cycle. We also found that the cash flow model is a more reliable indicator of a firm’s life cycle stages than its age or growth rate. Our empirical results support the pecking order theory as a framework for understanding the behavior of publicly traded firms throughout their lifetimes.

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