Impact of Capital Structure and Debt Characteristics on Default Risk of Listed Real Estate Firms in Vietnam

Giang Nguyen Thuc Huong, Lan Anh Nguyen Thi () and Ngan Nguyen Thu
Additional contact information
Giang Nguyen Thuc Huong: Hanoi University of Science and Technology, School of Economics and Management
Lan Anh Nguyen Thi: Hanoi University of Science and Technology, School of Economics and Management
Ngan Nguyen Thu: Hanoi University of Science and Technology, School of Economics and Management

A chapter in Proceedings of the 11th International Conference on Emerging Challenges: Smart Business and Digital Economy 2023 (ICECH 2023), 2023, pp 327-344 from Springer

Abstract: Abstract Research purpose: This study aims to examine the impact of capital structure and debt characteristics on the default risk of listed real estate firms in Vietnam stock market. Research motivation: The real estate industry in Vietnam has experienced significant growth and transformation over the past decade, contributing to the country’s economic development and attracting both domestic and international investors. However, various challenges and risks appear, especially since the Covid-19 outbreak, lead to the risk of default of real estate firms. Besides, research on the impact of capital structure and debt characteristics on default risk of listed real estate firms are still limited and not up to date, in particular for the Vietnamese context. Research methodology: The assessment of default risk is conducted in using KMV model to measure the distance to default (DD) and the probability of default (PD). The research focuses on various dimensions of capital structure and debt characteristics, including debt maturity, source of debt, and cost of debt. The study sample includes 42 listed firms in the real estate industry in the period from 2018–2022. Main findings: Regression model shows that a firm’s capital structure, including long-term debt to assets (LTDA) and short-term debt to assets (STDA), significantly influences its likelihood of default. Balancing LTDA and STDA is crucial for mitigating default risk. Larger firms (SIZE) have a reduced probability of default due to their financial resources. Volatility (Vol) also impacts financial stability, emphasizing the need for robust market risk management. Practical/managerial implications: This research contributes valuable insights for businesses, investors, financial decision-makers, financial institutions, and other stakeholders. It emphasizes the critical importance of debt management, financial stability, and risk mitigation strategies in reducing the probability of default among real estate companies.

Keywords: Capital structure; debt characteristics; default risk; listed real-estate firms; Vietnam (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-348-1_25

Ordering information: This item can be ordered from
http://www.springer.com/9789464633481

DOI: 10.2991/978-94-6463-348-1_25

Access Statistics for this chapter

More chapters in Advances in Economics, Business and Management Research from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().