This chapter aims to find if trade-off theory or pecking order theory best explain the capital structure of non-state firms during the post-transition process in Vietnam. We investigate the effect of human capital, institutional quality, and their interaction on the capital structure decision. Findings suggest the capital structure of Vietnamese firms is a balance between the trade-off theory and the pecking order theory. Accessing formal debts is tough for young and non-state firms, whereas those with access to formal loans take advantage of their leverage tools to exploit the tax benefits against the costs of financial distress. Other findings include: (i) profitability and debt tax shields are no longer important when entrepreneurs adopt informal debt financing; (ii) high-quality institutions enable firms to reduce reliance on debt financing; (iii) while human capital encourages entrepreneurs to obtain more loans, its interaction with institutional quality deters debt financing and favours other financial sources.
Titolo: | The Interaction of Institutional Quality and Human Capital in Shaping the Dynamics of Capital Structure |
Autore/i: | Santarelli, Enrico; Tran, Hien Thu |
Autore/i Unibo: | |
Anno: | 2020 |
Titolo del libro: | Micro, Small, and Medium Enterprises in Vietnam |
Pagina iniziale: | 63 |
Pagina finale: | 87 |
Abstract: | This chapter aims to find if trade-off theory or pecking order theory best explain the capital structure of non-state firms during the post-transition process in Vietnam. We investigate the effect of human capital, institutional quality, and their interaction on the capital structure decision. Findings suggest the capital structure of Vietnamese firms is a balance between the trade-off theory and the pecking order theory. Accessing formal debts is tough for young and non-state firms, whereas those with access to formal loans take advantage of their leverage tools to exploit the tax benefits against the costs of financial distress. Other findings include: (i) profitability and debt tax shields are no longer important when entrepreneurs adopt informal debt financing; (ii) high-quality institutions enable firms to reduce reliance on debt financing; (iii) while human capital encourages entrepreneurs to obtain more loans, its interaction with institutional quality deters debt financing and favours other financial sources. |
Data stato definitivo: | 12-apr-2020 |
Appare nelle tipologie: | 2.01 Capitolo / saggio in libro |