Influence of Capital Structure on Financial Performance of Securities Companies in Vietnam

Long Vu () and Ly Luu Tran
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Long Vu: Hanoi University of Industry
Ly Luu Tran: Thuyloi University

A chapter in Proceedings of the 5th International Conference on Research in Management and Technovation, 2025, pp 605-620 from Springer

Abstract: Abstract This study examines the impact of capital structure on the financial performance of securities companies in Vietnam over the period from 2015 to 2022. By employing the Pooled Ordinary Least Squares (OLS) regression model, the research analyzes how key capital structure components liquidity (LIQ), long-term asset ratio (LAR), and debt-to-assets ratio (DR) influence financial performance metrics, specifically Return on Assets (ROA) and Return on Equity (ROE). The study also incorporates control variables such as company size (SIZE) and growth (GROW) to ensure comprehensive analysis. The findings reveal that an increase in the long-term asset ratio and the debt-to-assets ratio negatively impacts both ROA and ROE. Conversely, larger company size is associated with improved financial performance, indicating economies of scale. The liquidity ratio, although not statistically significant, shows a negative correlation with ROA and ROE, implying potential inefficiencies in asset utilization. Additionally, the growth rate of companies positively influences both ROA and ROE, highlighting the significance of business expansion and development in enhancing financial performance. The study highlights the importance of optimal capital structure decisions in enhancing financial performance and provides empirical evidence to guide managers and policymakers in the strategic financial planning of securities firms. By balancing debt and equity effectively, firms can mitigate financial risks and improve overall profitability, contributing to the stability and growth of Vietnam's financial markets.

Keywords: Capital structure; Financial performance; Securities companies; Vietnam (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:spr:prbchp:978-981-97-9992-3_38

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DOI: 10.1007/978-981-97-9992-3_38

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