Capital structure and performance of vietnam listed firms

0*** RATE -0.1173 0.0217 -5.39 0.044** ***Siginificant at 1%, **Siginificant at 5%, and *Siginificant at 10% Source: Financial statements of listed firms and own computation from Stata Version 14 The regression result in table 4 shows that all selected variables of capital structure were the statistically significant factors affecting listed firms’ performance measured by ROA. In which, the debt on asset ratio, asset tangibility and management capacity are independent variables with high significance at 1%. Liquidity and offer interest rate has statistical significance at 5%, and firm’s performance has statistical significance at 10%. This result ensures that all six capital structure variables affecting to firms ‘performance. The total debts on total assets ratio (TD) is used as a proxy for capital structure and it has a negative and significant relationship with the dependent variable (ROA) which means that, when the total debts on total assets ratio of listed firms increases, it will result in decreasing of firms’ performance. Or, if the total debts on total assets ratio of firms increase 1%, firm’s performance will reduce 0.14%. Moreover, regression results also suggest that TD is statistically significant negative association with return on asset (ROA) with P-value of 0.000. This result implies that as a firms’ debt level increases its return on asset is expected to decline because the excessive use of the leverage might impose high interest costs. The firm size which measures log of total assets has positive and significantly affects firms’ performance at 10% significant level on ROA which indicates that larger firms can have more opportunities to enhance their performance results because it is easier for them approaching more debt sources with lower cost. The result indicates that when firm size of listed firms increases, it will result in increasing of firms’ performance. Or, if firm size increase 1%, firm’s performance will improve 0.69%. The composition of the asset structure (net fixed assets on total assets ratio – AS) has a positive and significant impact on listed firms’ performance at 1% significant level. This result indicates that firms with a high ratio of AS have a higher performance ratio, which implies that large firms often use their fixed assets efficiently, so it has a positive impact on their performance. The result also indicates that if net fixed assets 316 HỘI THẢO KHOA HỌC QUỐC TẾ KHỞI NGHIỆP ĐỔI MỚI SÁNG TẠO QUỐC GIA on total assets ratio increase 1%, firm’s performance will improve 0.06%. Liquidity or risk liquidity (LQ) has a negative relationship with listed firms’ performance over the period 2010 to 2016. If liquidity increases 1%, firms’ performance will decrease 0,05%. It is a significant impact of liquidity on firms’ performance, therefore, the listed firms show have policies to manage liquidity reasonably. The management capacity (MA) shows a positive impact firms’ performance (ROA). This result proves that if firms having number of members in control board reasonably, it seems to support a improvement in firms’ performance. Final selected independent variable is RATE (Vietnam Market Offer Rate), the RATE variable has a negative influence on Vietnam listed firms’ performance. The outcomes show that if firms have debts with high offer interest rate, it normally gains fewer profits. It is obviously that excessive cost of the leverage will impact to firms’ profit. In this research, if RATE increases 1%, firms’ performance will reduce 0.12%. Therefore, it is important for firms seeking low-cost loans. 5. CONCLUSIONS This research examines the impact of capital structure on firms’ performance. The annual data over the period from 2010 to 2016 of 448 listed firms is collected from Vietnam stock market. Based on research sample of the 448 listed firms and using financial performance measures (Capital Structure -TD, Firm size - SIZE, Asset tangibility - AS, Liquidity - LQ, Management capacity - MA and Vietnam market offer rate - RATE), exponential generalized least square and descriptive stat tools (OLS) and Tobit model are used to estimate results. The findings show that all the three financial variables, total debts on total assets ratio, liquidity ratio and Vietnam market offer rate, negatively impact on firms’ performance. Besides, other three variables, firm size, asset tangibility, management capacity, positively impact on firms’ performance. These results, in general, lead to the conclusion that capital structure choice is an important determinant of firms’ performance. The result proves that with the increase in leverage as well as loans with high interest rate negatively affects the firms’ performance. Moreover, the firm size, the asset structure and the management capacity positively impact on firms’ performance. The results recommend that corporate managers should not use so much leverage in their capital. In addition, managers should consider seeking low – cost loans, remaining number of members in control board reasonably, and managing liquidity risk suitably. REFERENCES Abor. Joshua (2005). 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