Determinants of capital structure for listed construction companies in Vietnam

Abstract

This study explores the determinant of capital structure of Vietnam listed construction companies using panel data for the period of 2007-2012. Tangibility, profitability, size, growth and liquidity use as independent variables. Total leverage, short-term leverage and long-term leverage were dependent variable. The research finds that all the selected independent variables were significantly associated to at least one of the leverage ratios except profitability. Profitability seems to have no significant effect to the capital structure of Vietnamese construction listed firms. A positive significant related to leverage and tangibility and growth variables; a negative relationship between leverage and liquidity also supported the implication of pecking order theory while a positive significant of size variable confirmed to prediction of trade off theory. The study also finds that there are different in determinants of capital structure between public and private firms in construction industry about the profitability and growth variables. Size, profitability and liquidity effect to leverage of public firms while size, growth and liquidity have a relation to leverage of private firms. Public firms tend to use more debt than private firms.