tailieunhanh - Determinants of capital structure of listed firms in Vietnam: A quantile regression approach

This study empirically examines the link between firm characteristics and leverage using the data of Vietnamese non-financial listed firms from 2006 to 2015. In addition to traditional panel data methods, we employ a conditional quantile regression that unveils the behavior of regressors throughout the leverage distribution. | 114 Nguyen Thi Canh et al. / Journal of Economic Development 24(2) 114-131 Determinants of capital structure of listed firms in Vietnam: A quantile regression approach NGUYEN THI CANH University of Economics and Law – canhnt@ NGUYEN THANH LIEM University of Economics and Law – liemnt@ TRAN HUNG SON University of Economics and Law – sonth@ ARTICLE INFO ABSTRACT Article history: This study empirically examines the link between firm characteristics and leverage using the data of Vietnamese non-financial listed firms from 2006 to 2015. In addition to traditional panel data methods, we employ a conditional quantile regression that unveils the behavior of regressors throughout the leverage distribution. The results confirm the non-linear relationship between firm characteristics and leverage at different levels of debt. Received: Nov. 14, 2016 Received in revised form: Feb. 9, 2017 Accepted: Mar. 31, 2017 Keywords: Leverage Capital structure Quantile regression Vietnam Nguyen Thi Canh et al. / Journal of Economic Development 24(2) 114-131 115 1. Introduction There have been numerous studies on capital structure determinants with some consistence in which size, asset composition, growth opportunities, profitability, and non-debt tax shields are critical. Nonetheless, most empirical studies assume the same impact of explanatory variables across high and low debt levels. This is unlikely in light of the papers suggesting that highly leveraged firms tend to encounter higher borrowing costs, thus reducing their debt capacity dramatically (Peyer & Shivdasani, 2001). Lenders tend to perceive higher risk of bankruptcy, and can demand premium for such risk by asking for extra protection. As a result, conventional determinants may exert different effects on leverage, depending on the leverage levels of firms. In fact, the potential non-linearity of the impacts of variables on capital structure decisions exists within the .