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Managers’ loss aversion and firm debt financing: Some insights from Vietnamese SMEs

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  • Kim, Huong Trang
  • Nguyen, Quang

Abstract

This study aims to examine whether managers' loss aversion has significant impact on debt financing behavior of SMEs. For this purpose, we carried out a lab-in-the-field experiment with a sample of top managers from 320 textile and garment SMEs in Vietnam. We find that SMEs led by more loss-averse managers are less likely to access domestic debt, and have a significantly lower level of foreign debt. Notably, we observe that loss aversion exerts a stronger effect on domestic debt than on foreign debt financing behavior.

Suggested Citation

  • Kim, Huong Trang & Nguyen, Quang, 2022. "Managers’ loss aversion and firm debt financing: Some insights from Vietnamese SMEs," Finance Research Letters, Elsevier, vol. 44(C).
    • Handle: RePEc:eee:finlet:v:44:y:2022:i:c:s1544612321001276
    DOI: 10.1016/j.frl.2021.102046
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    Cited by:

    1. Bonilla, Claudio A. & Fica, Diego, 2022. "Loss aversion and risky entrepreneurship," Finance Research Letters, Elsevier, vol. 48(C).

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    More about this item

    Keywords

    Loss aversion; Debt financing; Managers; SMEs; Experiment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • M50 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - General

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