Macroeconomic Factors and Corporate Capital Structure: Evidence from Listed Joint Stock Companies in Vietnam

Abstract

This study is conducted to examine how macro determinants affect capital structure of non-financial joint stock companies in Vietnam. The two-step system GMM is used to analyze data which is a combination of two sources: financial statements of 464 listed joint stock companies on 3 main stock exchanges (HOSE, HNX, and UPCOM), and World Bank database in the period of 2008-2015. The findings show that firms’ capital structure decisions are impacted by elements which reflect macroeconomic conditions. In detail, the inflation rate has positive influence while corporate income tax rate is on the contrary. Besides, the affectation of financial development and institutional quality on capital structure of these enterprises is found clearly. Not only macro factors, this research explores but also other determinants which are characteristics company such as size, profitability, and payment capacity. Finally, it is noticeable that capital structure decisions depend on capital structure of the previous year.