Debt, Growth Opportunities and Investment of Listed Firms in Vietnam
Main Article Content
Abstract
This study examines the simultaneous relationship between debt and debt maturity structure of firms with different growth opportunities. In addition, we analyze the effects of these factors on the investment of Vietnamese-listed firms in the period 2010-2020. Using the 3SLS regression model, the results show a negative relationship between debt and debt maturity structure, supporting the underinvestment hypothesis. However, when firms have higher growth opportunities, the relationship between the two factors turns positive, supporting the hypothesis of liquidity risk. The results of using the System GMM model to examine the impact of debt, debt maturity, and growth opportunities on investment further confirm the above findings. These findings have important implications for managers in making investment decisions.
Keywords:
debt maturity structure, debt, underinvestment
References
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Stohs, M. H., & Mauer, D. C. (1996). The Determinants of Corporate Debt Maturity Structure. The Journal of Business, 69(3), 279-312.
Umutlu, M. (2010). Firm leverage and investment decisions in an emerging market. Quality & Quantity, 44(5), 1005-1013. https://doi.org/10.1007/s11135-009-9250-y
Vo, X. V. (2018). Leverage and corporate investment - Evidence from Vietnam. Finance Research Letters, 28, 1-5. https://doi.org/10.1016/j.frl.2018.03.005
Aivazian, V. A. et al. (2005b). Debt maturity structure and firm investment. Financial Management, 34(4), 107-119.
Bae, S. C. (2009). On the interactions of financing and investment decisions: Evidence from Chinese industrial companies. Managerial Finance, 35(8). https://doi.org/10.1108/03074350910967231
Brunnermeier, M., & Krishnamurthy, A. (2020). Corporate debt overhang and credit policy.
Coad, A., & Srhoj, S. (2020). Catching Gazelles with a Lasso: Big data techniques for the prediction of high-growth firms. Small Business Economics, 55(3), 541-565. https://doi.org/10.1007/s11187-019-00203-3
Childs, P. D. et al. (2005). Interactions of corporate financing and investment decisions: the effects of agency conflicts. Journal of Financial Economics, 76(3), 667-690. https://doi.org/10.1016/j.jfineco.2004.06.012
Dang, V. A. (2011). Leverage, debt maturity and firm investment: An empirical analysis. Journal of Business Finance & Accounting, 38(1), 225–258. https://doi.org/10.1111/j.1468-5957.2010.02215.x
Ding, N. et al. (2020). Debt choice, growth opportunities and corporate investment: Evidence from China. Financial Innovation, 6(1), 1-22. https://doi.org/10.1186/s40854-020-00194-1
Elyasiani, E. et al. (2002). The determinants of debt maturity at issuance: a system-based model. Review of Quantitative Finance and Accounting, 19(4), 351-377. https://doi.org/10.1023/A:1021161309198
Gebauer, S. et al. (2017). Corporate debt and investment: A firm level analysis for stressed euro area countries.
Jiming, L. et al. (2010). The impact of debt financing on firm investment behavior: Evidence from China. International Journal of Digital Content Technology and Its Applications, 4(9), 17-26. https://doi.org/10.3390/su10061774
Joshi, H. (2019). Cash holding or Net Debt, What is Relevant for Indonesian Firms? The South East Asian Journal of Management, 13(1), 18-36. https://doi.org/10.21002/seam.v13i1.10566
Kalemli-Ozcan et al. (2018). Debt Overhang, Rollover Risk, and Corporate Investment: Evidence from the European Crisis.
Khaw, K. L. H & Lee, B. C. J. (2016). Debt maturity, underinvestment problem and corporate value. Asian Academy of Management Journal of Accounting and Finance 12(1), 1-17. http://dx.doi.org/10.21315/aamjaf2016.12.S1.1
Lang, L. E. et al. (1996). Leverage, investment and firm growth. Journal of Financial Economics, 40(1), 3-29. https://doi.org/10.1016/0304-405X(95)00842-3
Luu, L. & Nguyen, L. (2021). Short-term debt and trade credit: Evidence on a non-linear relationship Cogent Economics & Finance, 9(1), 1975412. https://doi.org/10.1080/23322039.2021.1975412
Liu, Y. et al. (2020). Debt rollover risk, credit default swap spread and stock returns: Evidence from the COVID-19 crisis. Journal of Financial Stability, 53, 100855. https://doi.org/10.1016/j.jfs.2021.100855
Luo, S. et al. (2018). Financial structure and financing constraints: Evidence on small-and medium-sized enterprises in China. Sustainability, 10(6), 1774. https://doi.org/10.3390/su10061774
Miller, M. H., & Modigliani, F. (1963). Dividend Policy and Market Valuation: A Reply. The Journal of Business, 36(1), 116-119.
Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 145-175. https://doi.org/10.1016/0304-405X(77)90015-0
Nnadi, M. et al. (2020). Empirical analysis of debt maturity, cash holdings and firm investment in developing economies. International Journal of Finance & Economics. https://doi.org/10.1002/ijfe.2324
Phan, Q. T. (2018). Corporate debt and investment with financial constraints: Vietnamese listed firms. Research in International Business and Finance, 46, 268-280. https://doi.org/10.1016/j.ribaf.2018.03.004
Renneboog, L. et al. (2008). The Price of Ethics and Stakeholder Governance: The Performance of Socially Responsible Mutual Funds. Journal of Corporate Finance, 14, 302-22. https://doi.org/10.1016/j.jcorpfin.2008.03.009
Fatmasari, R. (2011). The Relation Between Growth Opportunity, Leverage Policy and Function of Covenant to Control The Agency Conflict Between Shareholders and Debtholders. Bulletin of Monetary Economics and Banking, 13(3), 307-323. https://doi.org/10.21098/bemp.v13i3.395
Roodman, D. (2009). How to do xtabond2: An introduction to difference and system GMM in Stata. Stata Journal, 9(1), 86-136. https://doi.org/10.1177/1536867X0900900106
Stohs, M. H., & Mauer, D. C. (1996). The Determinants of Corporate Debt Maturity Structure. The Journal of Business, 69(3), 279-312.
Umutlu, M. (2010). Firm leverage and investment decisions in an emerging market. Quality & Quantity, 44(5), 1005-1013. https://doi.org/10.1007/s11135-009-9250-y
Vo, X. V. (2018). Leverage and corporate investment - Evidence from Vietnam. Finance Research Letters, 28, 1-5. https://doi.org/10.1016/j.frl.2018.03.005