tailieunhanh - Determinants of corporate investment decisions: The case of Vietnam

Determinants of corporate investment decisions: The case of Vietnam. The purpose of this study is to examine determinants of corp orate investment deci-sions. By adopting a static app roach, the findings show that cash-f low, fixed cap ital intensity, business risk, leverage, andfirm size are the key elements in making invest- ment activities. | Journal of Economics and Development Vol. 15, , April 2013, pp. 32 - 48 ISSN 1859 0020 Determinants of Corporate Investment Decisions: The Case of Vietnam Phan Dinh Nguyen University of Adelaide, Australia Email: nguyenpdinh@ Phan Thi Anh Dong Economics University of Hochiminh city, Vietnam Abstract The purpose of this study is to examine determinants of corporate investment decisions. By adopting a static approach, the findings show that cash-flow, fixed capital intensity, business risk, leverage, and firm size are the key elements in making investment activities. Additionally, by using a dynamic approach, the results reveal that past investment also affects investment decisions at the firm level. Keywords: Corporate investment, Tobin’s q, cash-flow, financial constraint. Journal of Economics and Development 32 Vol. 15, , April 2013 1. Introduction ard, the ratio of ‘lemon’ in the applicant pool and the probability of default will increase. What are the determinants of investment decisions at firm level? This question has been raised since the Modigliani and Miller theorem (1958) postulated that there has been no relation between the financial structure and financial policy for real investment decisions under certain conditions; and extended this to neoclassical models of investment; for instance, Jorgenson (1963); Hall and Jorgenson (1967). According to the q-theory of Tobin (1969) and extended into a proposed model by Hayashi (1982), investment demand could be predicted by the ratio of the market value of a firm’s capital stock to its replacement cost under perfect market assumptions (symmetric information, no transaction costs, no default risk, and no taxation); and its market value could also explain further investment opportunities. However, Akerlof (1970) indicated that this theorem will only be correct in a world of perfect capital markets. It cannot interpret investment decisions at the micro level if there is asymmetric .

• Quản trị kinh doanh
• Determinants of corporate
• Investment decisions
• The case of Vietnam
• The purpose of this study
• Fixed cap ital intensity