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

Thuy Thi Thanh Vu, Phuong Thi Thanh Nguyen (), Trang Kieu Pham and Anh Thi Kim Vu ()
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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

A chapter in Proceedings of the 5th International Conference on Research in Management and Technovation, 2025, pp 467-491 from Springer

Abstract: 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.

Keywords: Tobin’s Q; ROA; ROE; Capital structure; Corporate value; Nonlinear impact (search for similar items in EconPapers)
JEL-codes: G32 L11 M40 M41 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/978-981-97-9992-3_31

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