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Nonlinear Impact of Capital Structure on Corporate Value: A Case Study of Listed Companies on the Vietnamese Stock Market

Author

Listed:
  • Thuy Thi Thanh Vu

    (University of Labour and Social Affair)

  • Phuong Thi Thanh Nguyen

    (Thuongmai University)

  • Trang Kieu Pham

    (National Economics University)

  • Anh Thi Kim Vu

    (Trade Union University)

Abstract

In order to maximize corporate value, the study’s dual objectives are to assess the nonlinear effects of capital structure on that value and to identify the threshold for each type of leverage. The sample of 769 firms that were listed between 2012 and 2022 on the Vietnamese stock market is used by the writers. According to GMM, confirm that capital structure has a third-order nonlinear effect on corporate value. Based on the size of the enterprise, the derivative method has determined the threshold of the optimal capital structure. Capital structure (debt/equity) is less than 62,098, impacting positively on ROE, capital structure exceeds the threshold of 62,098; ROE tends to decrease; capital structure by industry group has a nonlinear effect on Tobin’Q with the optimal capital structure threshold of 15,058. When enterprises are divided by operating time, the capital structure of each group of enterprises also has a nonlinear effect on Tobin’Q, with a threshold value of 6094. In particular, the test results have demonstrated that there is a difference in average Tobin’Q, and there is no difference in average ROE and ROA if enterprises are divided by business lines, by size, and by duration. The success of the article is to point out the thresholds of optimal capital structure at which corporate value (Tobin’s Q, ROA, and ROE) reaches its maximum. In addition, the study also compares the nonlinear impact of capital structure on corporate value according to each group of enterprise size, operating time, and business industry.

Suggested Citation

  • Thuy Thi Thanh Vu & Phuong Thi Thanh Nguyen & Trang Kieu Pham & Anh Thi Kim Vu, 2025. "Nonlinear Impact of Capital Structure on Corporate Value: A Case Study of Listed Companies on the Vietnamese Stock Market," Springer Proceedings in Business and Economics,, Springer.
    • Handle: RePEc:spr:prbchp:978-981-97-9992-3_31
    DOI: 10.1007/978-981-97-9992-3_31
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    More about this item

    Keywords

    Tobin’s Q; ROA; ROE; Capital structure; Corporate value; Nonlinear impact;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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