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Leverage and corporate investment – Evidence from Vietnam

Xuan Vinh Vo

Finance Research Letters, 2019, vol. 28, issue C, 1-5

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.

Keywords: Corporate investment; Leverage; Vietnam (search for similar items in EconPapers)
JEL-codes: G10 G30 G31 (search for similar items in EconPapers)
Date: 2019
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