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Leverage and corporate investment – Evidence from Vietnam

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  • Vo, Xuan Vinh

Abstract

This paper explores the link between financial leverage and corporate investment in the context of an emerging market. We use a panel data set of firms listed on the Ho Chi Minh City stock exchange over the period 2006–2015. We employ a fixed effects econometric technique of panel data analysis. Consistent with previous studies, our results reveal a negative link between leverage and investment. This implies that debt disciplinarily constrains corporate investment. However, contrary to previous studies, we find that leverage has a stronger negative impact on corporate investment for firms with high growth opportunities than for firms with low growth opportunities. This finding has relevant implications in the context of emerging markets.

Suggested Citation

  • Vo, Xuan Vinh, 2019. "Leverage and corporate investment – Evidence from Vietnam," Finance Research Letters, Elsevier, vol. 28(C), pages 1-5.
    • Handle: RePEc:eee:finlet:v:28:y:2019:i:c:p:1-5
    DOI: 10.1016/j.frl.2018.03.005
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    Cited by:

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    5. Bukalska Elżbieta & Skibińska-Fabrowska Ilona, 2023. "Corporate Investment in Bank-Dependent Companies in Crisis Time," Central European Economic Journal, Sciendo, vol. 10(57), pages 1-22, January.
    6. Choi, Paul Moon Sub & Chung, Chune Young & Vo, Xuan Vinh & Wang, Kainan, 2020. "Are better-governed firms more innovative? Evidence from Korea," International Review of Economics & Finance, Elsevier, vol. 69(C), pages 263-279.
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    More about this item

    Keywords

    Corporate investment; Leverage; Vietnam;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies

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