Impact of Capital Structure on the Financial Performance of Pharmaceutical Companies Listed on the Vietnamese Stock Exchange

Abstract

This study analyzes the impact of capital structure on the financial performance of pharmaceutical companies listed on the Vietnamese stock market. Based on data from 37 companies during the 2016-2023 period, a regression model was used to assess the influence of variables such as the short-term debt ratio (SHD), long-term debt ratio (LOD), debt-to-equity ratio (D/E), fixed asset intensity (FAI), and firm size (SIZE) on financial performance, measured by ROA and ROE. The results show that the long-term debt ratio (LOD) and debt-to-equity ratio (D/E) have a negative and statistically significant impact on ROA and ROE, suggesting that using high financial leverage can decrease financial performance. Meanwhile, fixed asset intensity (FAI) has a positive impact on ROE, indicating that investing in fixed assets can improve the return on equity. However, the short-term debt ratio (SHD) and firm size (SIZE) have no significant impact on financial performance. Based on these results, the study recommends that pharmaceutical companies should restructure their debt, reduce financial leverage, strengthen capital mobilization from internal and equity sources, invest appropriately in fixed assets, and improve their financial management. These recommendations are intended to help companies enhance operational efficiency and contribute to the sustainable development of Vietnam's pharmaceutical industry.