The effect of capital structure on the performance of listed companies on Hanoi Stock Exchange

Abstract

Capital structure in the corporate finance theory is among the puzzling and controversial subjects, especialy regarding
the effect of capital structure on company performance. In Vietnam, one of the important steps in financial liberalization
and financial system development is the introduction of the Vietnam securities market on July 2000. There are a variety
of papers about the relationship between capital structure and performance of company, but the conclusions are
inconsistent. The purpose of this paper is to find out the effect of capital structure on company performance based on
the sample of 174 listed companies on Hanoi Stock Exchange (HNX) in the period of 2008- 2014. The empirical findings
from this research are as follows: (1) Capital structure has an effect on company performance significantly; (2) Debt
ratio has a positive relationship with the return on equity (ROE) and the market cap plus debt over book value of equity
(MBVE) but a negative relationship with return on asset (ROA) and gross margin; (3) growth opportunity has a positive
effect on ROE, ROA but negative effect on GM, MBVE; (4) company size has an inverse relationship with ROE, ROA
but direct relationship with GM and MBVE; (5) asset turnover has possitve effect on profitability; (6) macroeconomics
instability has significant effect on company performance.