How do intangible assets and financial constraints affect stock returns in Vietnam before and during the COVID‐19 pandemic?

Khoa Dang Duong, Tran Ngoc Huynh and Linh Thi Diem Truong

International Journal of Finance & Economics, 2025, vol. 30, issue 1, 315-329

Abstract: We are the first to determine the effect of intangible intensity (INTANG) on cross‐sectional stock returns after controlling financial constraints in the Vietnam stock market. Our sample includes 37,938 firm‐month observations from 488 non‐financial firms from October 2008 to February 2021. We employ Fama and MacBeth regressions and portfolio analysis methodologies to estimate the impact of intangible assets and financial constraints on stock returns. Our findings show that a percentage increase in INTANG empowers stock returns by 0.922%. Meanwhile, the cross‐sectional stock returns decrease by 0.506% when the financial constraints index increases by a percentage point. Moreover, the results suggest that intangible assets in the entire sample and before COVID‐19 empower the stock return cross‐sectionally. Our findings are robust after employing alternative INTANG proxies. Our findings support the risk‐based explanation, the pecking order theory, and prior literature. Our findings suggest governments should promote intellectual property and copyright regulations to encourage Small and Medium Enterprises (SMEs) to expand intangible assets. Furthermore, investors can utilize our suggested models to construct their portfolios efficiently.

Date: 2025
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