Phân tích các yếu tố quyết định cơ cấu nguồn vốn của các doanh nghiệp đánh bắt và nuôi trồng thủy hải sản được niêm yết trên sàn chứng khoán Việt Nam

Nội dung text: Phân tích các yếu tố quyết định cơ cấu nguồn vốn của các doanh nghiệp đánh bắt và nuôi trồng thủy hải sản được niêm yết trên sàn chứng khoán Việt Nam

1. AN ANALYSIS ON THE DETERMINANTS OF CAPITAL STRUCTURE OF FISHERY AND AQUACULTURE ENTERPRISES LISTED IN VIETNAM STOCK MARKET PHÂN TÍCH CÁC YẾU TỐ QUYẾT ĐỊNH CƠ CẤU NGUỒN VỐN CỦA CÁC DOANH NGHIỆP ĐÁNH BẮT VÀ NUÔI TRỒNG THỦY HẢI SẢN ĐƯỢC NIÊM YẾT TRÊN SÀN CHỨNG KHOÁN VIỆT NAM GS.TS Phạm Quang Trung Học viện Quản lý Giáo dục - National Academy of Education Mamagement PGS.TS Vũ Huy Thông Trường Đại học Kinh tế Quốc dân - National Economics University Nguyễn Ngọc Nam Công ty TNHH Quản lý Quỹ SSI - SSI Asset Management Co., Ltd 1. Abstract The purpose of this paper is to investigate whether there are any factors influencing the capital structure of a company. In order to do that, the authors employed a fixed effect panel regression estimation developed in 2004 by Shah and Hijazi that will indicate whether there are positive and negative impacts of such factors on firm’s capital structure. The authors used data of among 19 listed Fishery & Aquaculture Enterprises in Vietnam stock market during 2008 - 2015 period. The authors have used book value of total liabilities to total assets (TD/TA) as representative for capital structure, growth opportunities, profitability, firm size, assets tangibility, liquidity, tax and firm risk as surrogate for factors likely influence firm’s capital structure. The empirical results strongly indicated that there are some relationships existing between firm’s capital structure and factors mentioned above. Specifically, growth opportunities, firm size, risks and taxes are positively related to financial leverage; on the contrary, profitability, assets tangibility and liquidity are negatively related to financial leverage. Finally, in term of importance degree, the size factor has strongest influence on firm’s capital structure, while tax is the one that least impacts firm’s capital structure. Keywords: Capital Structure, Determinants, Fixed Effect Panel Regression Model, Listed Fishery & Aquaculture Enterprises in Vietnam Tóm tắt: Bài nghiên cứu được thực hiện với mục đích tìm hiểu những yếu tố tác động đến cơ cấu vốn của một công ty, đặc biệt là các công ty trong ngành đánh bắt và nuôi trồng thủy sản. Các tác giả sử dụng mô hình tác động cố định trên dữ liệu bảng, được phát triển bởi Shah và Hijazi vào năm 2014, để chỉ ra các yếu tố được đề xuất ban đầu có ảnh hưởng tích cực hay tiêu cực đến cấu trúc vốn của một công ty. Đầu vào của mô hình là dữ liệu thu thập từ 19 công ty thuộc ngành đánh bắt và nuôi trồng thủy sản niêm yết trên sàn chứng khoán Việt Nam trong khoảng thời gian từ 2008 tới 2015. Để thể hiện cấu trúc vốn của doanh nghiệp, các tác giả sử dụng tỷ lệ giá trị sổ sách của Tổng Nợ trên Tổng Tài Sản, 608
2. trong khi Cơ Hội Tăng Trưởng, Khả Năng Sinh Lời, Quy Mô Doanh Nghiệp, Tài Sản Hữu Hình, Thanh Khoản, Thuế và Rủi Ro Doanh Nghiệp được xem như là các yếu tố có khả năng ảnh hưởng đến cấu trúc vốn. Kết quả thực tế cho thấy vẫn còn tồn tại mối quan hệ giữa cấu trúc vốn của doanh nghiệp và các yếu tố được đề cập ở trên. Cụ thể, Cơ Hội Tăng Trưởng, Quy Mô Doanh Nghiệp, Thuế và Rủi Ro Doanh Nghiệp được xác định là có mối quan hệ tích cực đến tỷ lệ Tổng Nợ/Tổng Tài Sản. Ngược lại, các yếu tố Khả Năng Sinh Lời, Tài Sản Hữu Hình và Thanh Khoản cho thấy tác động tiêu cực lên tỷ lệ này. Cuối cùng, bài nghiên cứu chỉ ra yếu tố Quy Mô Doanh Nghiệp có ảnh hưởng lớn nhất đến cơ cấu vốn của doanh nghiệp và Thuế được xem là yếu tố ít có tác động nhất đến cơ cấu vốn của doanh nghiệp. Từ khóa: Cấu trúc vốn, Yếu tố quyết định, Mô hình tác động cố định, Các công ty đánh bắt và nuôi trồng thủy sản được niêm yết trên sàn chứng khoán Việt Nam. 2. Materials and Methods 2.1. Literature Review and Hypotheses Pioneering in theoretically and algebraicallyexamining the relationship between firm value and capital structure, Modigliani and Miller (1958) proposed their capital structure irrelevance theory which argued that the firm value was independent of firm capital structure in a world with perfect market conditions. However, it is obvious that capital markets are imperfect in reality, therefore, Miller and Modigliani (1963) modified their propositions and considered the benefit of corporate tax as a determinant of firm’s capital structure. They proposed that the higher the debt-to-equity ratio a company employs, the greater the value of the firm reaches. The generations of researchers after Modigliani-Miller have developed a lot of studies through relaxing some assumptions of Modigliani-Miller and the two seem to come across strongly are Pecking Order Theory and Static Trade-off Theory. The Static Trade-off Theory stated that there is an optimal capital structure that involves firms balancing the advantages and disadvantages of using debt at the margin (Scott, 1977). The optimal point is the point that the value of the tax savings from debt is offset by the cost of debt adjusted for bankruptcy cost. Introduced firstly by Donaldson in 1961 then developed further by Myers and Majluf (1984), the pecking order theory suggested that companies prefer retained earnings to debt and will only under extreme circumstances use equity as financing due to the existence of transaction costs and the perspective of asymmetric information. In other words, according to the theory, there is no well-defined target debt-to-value ratio to a company, which in contrast with the trade- off theory. Based on these theories, the authors will attempt to develop quantitatively examinable hypotheses to test the relationship between determinants and capital structure of Fishery and Aquaculture (F&A) companies listed in Vietnam stock market. • Growth opportunities According to the pecking order theory, in the growing firms, in case of not having sufficient retained earnings as well as other internal funds to meet the capital demand for major investments opportunities, their managers have to seek for external funding sources. 609
3. As stood at the second position in the pecking order, debts will be priority used first. Hence, the amount of debts in growing firms should be considerably more than for a stagnant firm. Moreover, as enterprises in the growth phase, the confidence of investors in the enterprise will be high, so the ability of firms to access external sources of capital is large. The argument has been confirmed through the researches of Chen (2004), Booth et al. (2001) in international level; Nguyen and Ramachandran (2006), and Biger, Nguyen, and Hoang (2007) in Vietnam. However, according to trade-off theory, there relationship between leverage and growth opportunities should be negative (Frank & Goyal, 2005, 2009). The reason for this argument is when incurring financial distress, growing firms loose more of their value than the mature firms. Growing firms will also have higher agency costs of debt because debt holders fear that these growing firms will invest in risky projects for the future (Booth et al. 2001). As a consequence, growth opportunities will reduce leverage of a firm. This is consistent with the results from Olayinka (2011) and Ozkan (2001). Relied on the trade-off theory, empirical results of preceding authors, and the characteristics of F&A companies in Vietnam, this study therefore hypothesizes as follows: H1: There is a negative relationship (-) between growth opportunities and leverage in Vietnamese listed fishery and aquaculture firms. • Profitability As implied by trade-off theory, the higher the profitability of a firm, the higher the likelihood the firm is issuing debts because of the tax liability reduction. In additions, debt providers tend to be more willing to lend to profitable companies because such type of firms has less risk of incurring bankruptcy or financial distress. As a result, the theory suggests that there is a positive relationship between leverage and profitability. On the other hands, the pecking order theory predicts a negative relationship between leverage and profitability due to the asymmetry information. Normally, corporate executives always acquire better information about corporate value than the external investors. The asymmetry of information has led to the cost of raising external capital will be higher. Therefore, managers tend to prioritize the use of internal funds first, then to the external funds, such as borrowings. A profitable firm will retain more earnings and as a result, the leverage needed should decrease. This prediction, profitability has a negative effect on leverage, is confirmed by most of the previous empirical researches (Shah & Khan, 2007; Gonsález&Gonsáles, 2012; Ozkan, 2001; etc.). The experimental study of Pendey (2001), Huang and Song (2002), Braduri (2002) in countries with economies in transition also showed that profitability is inversely proportional to the level of debt. In the developing countries, especially in-transition economies like Vietnam, the problem of information asymmetry is exacerbated, so the managers tend to retain profits to finance their business, so the assumption is as follows: H2: There is a negative relationship (-) between profitability and leverage in Vietnamese listed fishery and aquaculture firms. • Size According to the trade-off theory, large firms are more diversified and have more stable cash flow, hence they will have less risk. The firms also have a lower financial 610
4. distress costs and a lower probability of bankruptcy costs. Along with the lower costs, the probability of being default is reduced and as a consequence, the firms would receive higher credit ratings and become easier in borrowing money from banks. This implies a positive relationship between size and leverage (Frank & Goyal, 2005; Titman &Wessels, 1988). The idea is confirmed by empirical studies done by Sbeiti (2010) and Olayinka (2011). However, the argument was rejected by Rajan and Zingales (1995). Instead, they follow the pecking order theory and suggest that the firm size negatively related to leverage. Due to the less information asymmetry in larger firms, issuing undervalued equity is hardly performed, therefore the firms are encouraged to use equity financing. Frank and Goyal (2009) agrees, and argues that larger firms have easier access to the capital market than their smaller counterparts. Hence, they are able to attract equity with lower cost and thus they will have less debts. A negative relationship between size and leverage has been recognized by empirical studies done by Chen (2004), Mazur (2007), Nunkoo&Boateng (2009). However, toward a developing security market like Vietnam stock market, there are many barriers preventing companies, especially those in fishery and aquaculture sector, to raise capital from issuing shares. It was demonstrated by the only 15% capital of firms provided by shares issuance while 32% capital funded by bank loans (Vietnam CFO Summit, 2011). According to the trade-off theory, the empirical results of the preceding researchers, and the characteristics of Vietnam F&A companies, the hypothesis is as follows: H3: There is a positive relationship (+) between firm size and leverage in Vietnamese listed fishery and aquaculture firms. • Tangibility Tangible assets include fixed assets, such as plants, properties and equipments, and current assets, for example inventory. Such kind of assets has higher liquidity, easier to collateralize, and only incurs a smaller loss in case of bankruptcy in comparison with intangible, nonphysical assets. Therefore, tangible assets are associated with a higher leverage ratio as they can serve as better collateral for debt (Rajan&Zingales, 1995). In addition, a high tangibility ratio could reduce agency costs and problems. From the theories, it could be realized that tangibility will positively affect leverage (Frank & Goyal, 2009). This is verified by the results of the majority of previous empirical research (Shah & Khan 2007; Chen, 2004; Nunkoo&Boateng 2009 etc.). The authors investigated that companies with high proportion of tangible assets has higher leverage ratios. Based on that as well as the assets structure of Vietnam F&A companies, this study therefore hypothesizes as follows: H4: There is a positive relationship (+) between assets tangibility and leverage in Vietnamese listed fishery and aquaculture firms. • Liquidity Liquidity can be defined as the ability for firms to use current assets to cover their current liabilities. This is an indicator to measure how well firms satisfy short-term obligations. The pecking order theory indicates that internal financing is more preferable than the other external sources of capital for firms. Therefore, companies are more likely to 611
5. create reserves from retained earnings (Ali et al. 2013). Additionally, companies that own a high proportion of liquidity assets, will be able to convert them into cash and use these cash inflows as an internal financing sources for new businesses instead of using debt financing. In short, liquidity negative affect leverage, which backed by the findings from the research performed by Sbeiti (2010) and Ozkan (2001). Based on the pecking order theory, empirical results of the previous authors as well as the features of F&A companies in Vietnam, this research therefore hypothesizes as follows: H5: There is a negative relationship (-) between liquidity and leverage in Vietnamese listed fishery and aquaculture firms. • Tax According to trade-off theory, companies will attempt to maintain an optimal capital structure by balancing the benefits and costs of capital. When using debt financing, companies could reduce a part of the corporate income tax due to the effect of tax-shields. Many previous studies showed the relationship between tax and the leverage. For example, Liansheng. W and Heng. Y (2009) found out that the companies beard high corporate income tax tend to use more debts as a method to lower the tax liability. From the above reasons, the research hypothesizes as follows: Hypothesis 6: There is a positive relationship (+) between tax and leverage in Vietnamese listed fishery and aquaculture firms. • Risk According to the trade-off theory, there is a negative relationship between the cost of bankruptcy and leverage. Bankruptcy costs are measured by the volatility of the operating income. Indeed, if using high proportion of debt financing, companies with wider range of the operating income’s volatility will be likely to confront with the risk of missing the satisfaction of debt liabilities. However, these companies can avoid the situations by using equity financing more because companies are able to refuse dividend payments in the time of financial distress. Therefore, firms with a high income volatility will attempt to borrow at minimum level while prioritize the use of equity. This research therefore hypothesizes as follows: Hypothesis 7: There is a negative relationship (-) between risk and leverage in Vietnamese listed fishery and aquaculture firms. 2.2. Data and Variables 2.2.1. Data set The research based on the data from financial statements of 19 listed fishery and aquaculture firms in Vietnam from 2008 to 2015. The companies mainly are small-medium enterprises with the charter capital ranged from VND 20 billion (~USD 1 million) to VND 1,891 billion (~USD 85 million). In term of geography, almost all 19 companies located on Mekong Delta which is the best place in Vietnam for fishing and nurturing fish and other aqua species. The information and data employed in the study mainly are financial indicators calculated form financial data in the enterprises’ reports. The list of fishery and aquaculture companies is made based on the classification of FiinPro software - the current 612
6. No.1 financial data provider in Vietnam. The stock tickers of the enterprises are quoted on, Hanoi Stock Exchange (HNX) and Hochiminh Stock Exchange (HSX), the two official stock exchanges in Vietnam. By using only data extracted from balance sheets and income statements audited by independent assurance firms, the accuracy of data was guaranteed at the highest level. Regarded to the time frame of the research, the authors intended to choose the range from 2008 to 2015 in order to partly reflect the difficulties of the industry after world financial crisis 2008 as well as the recovery after that. Finally, after utilized the panel data creation method in Eview, 152 observations in total were created for the model. 2.2.2. Variables • Dependent variable In this study, to represent the dependent variable, the authors employed the financial leverage which measured as the ratio of total debt to total equity. When measuring the financial leverage, the authors used book values instead of market values. This can be explained with the argument that the optimal financial leverage is determined by the trade-off between benefits and costs of debt financing. The main benefit of financial leverage is saving generated income through the tax shield. The benefit of this tax shield is constant even though the market value of the debt issued may varies (Banerjee et al, 2000). That is why the market value of debt is not relevant. On the other hand, the cost of borrowing makes the possibility of bankruptcy increase. If the company is in the financial distress and goes bankrupt soon, the value of the debt needs to be concerned when satisfying the creditors’ rights is the book value of debt rather than the market value. The second reason for the decision was the limitation in data which also was the trouble Titman and Wessels (1988) incurred in their study and forced them to use book values to measure debt rather than market values. The third reason was the simplicity in concept and the capacity of the variables in reflecting a firm’s total reliance on debt financing. • Independent variables As discussed above, there are many independent variables representing the determinants of capital structure choice, however, due to limitation in data sources, the model only utilized 7 independent variables as presented below: Table 2: Variable Proxies Independent No. Proxy Symbol variables Growth 01 GROWTH opportunities 02 Profitability PROFIT 03 Firm size SIZE Assets 04 TANG tangibility 613
7. 05 Liquidity LIQU 06 Tax TAX 07 Risk RISK (Source: Authors’ synthesis) 2.3. Research methodologies Since the capital structure of companies varies from a company to other one as well as from a year to another year, therefore to better reflect the phenomenon, the panel data method is employed. Due to the similarity between Vietnam’s economy and Pakistan’s economy, the authors decided to choose the model from Shah and Hijazi (2004)’s research, namely, “The Determinants of Capital Structure in Stock Exchange Listed Non-Financial Firms in Pakistan” to apply into the study. According to the research, the authors will conduct regression of all determinants related to a firm’s characteristics (growth opportunities, profitability, firm size, assets tangibility, liquidity, tax and firm risk) on capital structure. After that the regression coefficient will be standardized to assess the influence level of the factors to firm’s capital structure. 3. Result 3.1. Descriptive statistics on variables Table 3: Descriptive statistic of variables Date: 04/23/16 Time: 01:06 Sample: 2008 2015 GROWTH LIQU PROFIT RISK SIZE TANG TAX Mean 0.138722 1.685057 0.078477 4.298152 13.55594 0.260637 0.142264 Median 0.108680 1.183942 0.077069 1.054336 13.48024 0.243762 0.125073 Maximum 1.740094 11.77019 0.241017 106.7694 16.57265 0.619177 0.691078 Minimum -0.686244 0.673752 -0.460658 0.003985 10.63363 0.079811 -0.198546 Std. Dev. 0.369482 1.544484 0.073026 13.713320 1.197681 0.115393 0.129055 Skewness 0.883866 3.690294 -2.600124 6.033329 0.061429 0.726610 1.153899 Kurtosis 5.571276 18.72323 21.90159 42.82723 2.704962 3.279423 6.069470 Jarque-Bera 61.66350 1910.724 2433.981 10968.15 0.646897 13.86954 93.40134 Probability 0.000000 0.000000 0.000000 0.000000 0.723649 0.000973 0.000000 Sum 21.08568 256.1287 11.92844 653.3192 2060.503 39.61679 21.62407 Sum Sq. Dev. 20.61402 360.2002 0.805253 28396.33 216.6004 2.010654 2.514941 Observations 152 152 152 152 152 152 152 (Source: Authors’ calculation based on data of 19 F&A companies) 614
8. With the 152 observations from 19 companies, the following table demonstrates a summary of the descriptive statistics for variables and important factors in the authors’ analysis. The four most important information in the table are mean, standard deviation, minimum and maximum values of each variable. The study results showed that fishery and aquaculture companies has utilized a relatively high proportion of debts which demonstrated by the ratio of total debt on total assets was 59.1% on average, peaked at 94.3% and bottomed at 6.6%. Average tangible assets accounted for 26.0% of total assets, and the highest proportion recorded at 61.9% and the lowest at 8.0%. The average firm size is 13.5, the highest level was 16.5, the lowest was 10.6. Opportunities growth averaged at 13.8%, the highest rate was 174.0% and -89.7% is the lowest. The average profitability reached 8.1%, the highest number was 25.9% and the lowest was -68.6%. Average liquidity was 1.7, the highest was 11.7, the lowest was 0.6. Taxes attained 14.2% on average of accounting profit before tax, the highest was 66.9% while -19.8% was the lowest. Finally, the average risk was 4.29, the rate peaked at 106.7 while bottomed at 0.003. 3.2. Correlation matrix between the independent variables Through the above table, it can be seen that there was no strong correlation between the independent variables. But the figures have shown an interesting correlation between independent variables. First, the tangible asset factor related inversely to the size of the business and profitability. Large enterprises have the ratio of fixed assets over total assets smaller than small businesses’, because the large ones are too large that the proportion of fixed in total assets is not significant while the smaller ones have a much smaller assets base, hence, the proportion in smaller companies was still high. On the other hand, small businesses can use fewer fixed assets during a certain time period. However, the percentage of total assets is higher because of fixed assets of these enterprises are few and the fixed assets are necessary for production and business activities. Second, there is a positive relationship between firm size and profitability, due to the strong ability to make profit of enterprises. Third, there is a positive relationship between firm size and growth opportunities and through that, it indicates that bigger companies have higher growth opportunities. The reason is that large enterprises are eligible to invest more in research and development of new products and thus can add new product lines, as a result, growth opportunities will increase. Fourth, the positive relationships between liquidity and profitability shows that high profitable enterprises tend to use internal funds to cover capital needs of the business, thus less debt-financing leads to increased liquidity. Table 4: Correlation matrix between the independent variables LIQU PROFIT RISK SIZE TANG TAX GROWTH -0.108218 0.25901 -0.119484 0.182566 0.135088 0.057409 LIQU 1.000000 0.15079 0.077318 -0.194647 -0.236939 0.043445 PROFIT 0.15079 1.000000 -0.197179 0.01925 -0.07811 0.055458 RISK 0.077318 -0.197179 1.000000 0.056019 0.054467 -0.093302 615
9. SIZE -0.194647 0.01925 0.056019 1.000000 -0.338857 -0.098055 TANG -0.236939 -0.07811 0.054467 -0.338857 1.000000 0.026165 TAX 0.043445 0.055458 -0.093302 -0.098055 0.026165 1.000000 (Source: Authors’ calculation based on data of 19 F&A companies) 3.3. The regression results The estimation result is reported in Table 4. After three testing done namely Breuch - Pagan LM, testing the existence of fixed effects and Hausman testing, the authors concluded that the regression model best suited to the data of this thesis is the model of Fixed Effects Model (FEM). Table 5: Regression result of FEM Dependent Variable: LEV Method: Panel Least Squares Date: 04/23/16 Time: 01:08 Sample: 2008 2015 Periods included: 8 Cross-sections included: 19 Total panel (balanced) observations: 152 Variable Coefficient Std. Error t-Statistic Prob. C -0.928456 0.214316 -4.332190 0.0000 GROWTH 0.037281 0.013869 2.688002 0.0082 LIQU -0.040583 0.006942 -5.846386 0.0000 PROFIT -0.424880 0.076253 -5.571991 0.0000 RISK 0.001430 0.000370 3.865214 0.0002 SIZE 0.120514 0.015024 8.021395 0.0000 TANG -0.141765 0.066813 -2.121810 0.0358 TAX 0.091350 0.046448 1.966697 0.0514 Effects Specification Cross-section fixed (dummy variables) R-squared 0.940927 Mean dependent var 0.590859 Adjusted R-squared 0.929206 S.D. dependent var 0.203012 S.E. of regression 0.054016 Akaike info criterion -2.844571 Sum squared resid 0.367632 Schwarz criterion -2.327329 Log likelihood 242.1874 Hannan-Quinn criter. -2.634449 F-statistic 80.27764 Durbin-Watson stat 1.130057 Prob(F-statistic) 0.000000 (Source: Authors’ calculation based on data of 19 F&A companies) Finally, Specific regression models of the ratio of total debt to total assets as follows: 616
10. 4. Discussion 4.1. Discussion on the regression results After conducting the fit, assumptions and defects tests for the model, the authors supposes that FEM model does not have any defects so the result of the model is reliable, therefore, the authors will use the results of this model to discuss the research’s variables. Table 4 shows that the model’s is quite high, 94.09%, which means that 94.09% of the variation of the dependent variable is explained by the independent variables. By analyzing the influence of the independent variables on the dependent variable, the authors found that there is a positive relationship between growth opportunities with financial leverage which demonstrated by regression coefficient of 0.0373, p-value = 0.0082 < 1%, hence, it should be statistical significant at the 1% significance level. In other words, companies with high opportunity to grow in Vietnam fishery and aquaculture sector are likely to borrow more funds from financial institutions, such as banks, and vice versa. This is inconsistent with the hypothesis of the authors about the growth opportunities that the companies have growth opportunities will use lower debt levels and consistent with the second choice of pecking order theory which stated that in growing companies, if retained earnings as well as other internal funding do not meet the capital requirements for large investment opportunities, enterprises will use external funding and debt is ranked second in the pecking order so firms will use the loans. Hence, the firms with growth opportunities will use more debts to finance for their businesses. At the same time, the results are consistent with the results of empirical studies carried out by Deari F. and Deari M. (2009), Bayrakdaroglu A. et al (2013). Profitability relates negatively to financial leverage because the regression coefficient of -0.4249, p-value = 0 < 1% and the result should be statistically significant at the 1% level of significance. In other words, the fishery and aquaculture companies in Vietnam which has higher profitability use less debts and vice versa. This is consistent with the hypothesis of the authors about profitability that companies with higher profitability will use lower debt levels and consistent with the pecking order theory that businesses tend to use internal funds first, when internal funds have been used but not enough then external funding is considered. Therefore, profitable enterprises will use less debt. At the same time, the results are consistent with the results of experimental studies of Shah and Hijazi (2004), Jamal, A. et al (2013), F. and DeariDeari M. (2009), A. et Bayrakdaroglu al (2013). Size of enterprises positively relates to financial leverage which proved by the regression coefficient of 0.1205 p-value = 0 < 1% and the result should be statistically significant at the 1% significance level. It means that large enterprises in Vietnam fishery and aquaculture sector like borrowing more while small ones are more afraid of borrowing money. This is consistent with the hypothesis of the authors about the firm size that large enterprises will use higher debt levels and consistent with trade-offs theory that in large enterprises, the risk of bankruptcy is lower so that bankruptcy costs incurred less than those of mall companies. Therefore, according to trade-off theory, large firms will use more debt than small ones. Meanwhile, the results are consistent with the results of prior emperical studies conducted by Titman and Wessels (1988), Shah and Hijazi (2004), Jamal, A. et al 617
11. (2013), F. and DeariDeari M. (2009), Bayrakdaroglu A. et al (2013), Nguyen, TD and N. Ramachandran (2006), Dang Thi Quynh Anh and Quach Thi Hai Yen (2014). Assets tangibility has the regression coefficient of -0.1418 and is statistically significant at 1% level of significance because p-value = 0 80%, even 94% - 95% in 2012 - 2013 period) in comparison with the very minor proportion of long-term debt ( 70%), which is mainly because all investments in the fixed assets are often implemented at the initial period of business life. The fixed assets also not need to replace frequently so that it is reasonable that firms do not have to increase borrowing to finance for investment in fixed assets. More importantly, as the highly dependent on weather feature of fishery and aquaculture sector in Vietnam, Vietnamese banks prefer short-term loans on favorable term than risky long-term loans to minimize the loss if incurring. In addition, because of the seasonality of F&A products, Vietnamese companies have a high demand on working capital in harvesting season. Therefore, it is logical that the proportion of current assets which financed by short term loans outweigh the proportion of fixed assets. Finally, the negative relationship between assets tangibility and financial leverage was confirmed by Booth et al. (2001), Saylgan et al. (2006), Akinlo et al. (2011), Tran Dinh Khoi Nguyen and Ramachandran (2006), Biger, Nam V. Nguyen and Quyen X. Hoang (2008), Dzung et al. (2012). With regression coefficient equals -0.0406, liquidity relates negatively to financial leverage. The result is statistically significant at the 1% level of significance because the p- value = 0 < 1%. It indicates that the Vietnamese fishery and aquaculture companies with higher liquidity will use less debt than the lower liquidity companies and vice versa. This is consistent with the hypothesis of the authors on liquidity that there is a negative relationship between liquidity and leverage in Vietnamese listed F&A firms. It also is consistent with the pecking order theory that firms prefer internal financing rather than the use of debt from external sources. Therefore, companies have more assets with high liquidity will use them as internal funding sources to finance new investment projects without having to use external funding. The result is the same as the outcomes of some prior experimental studies conducted by Deesomsak et al (2004), Jamal, A. et al (2013). With 0.0913 regression coefficient, taxes have positive relationship with financial leverage. The result is reliable because the p-value = 0.0514 < 10% which indicated that the result is statistically significant at the 10% significance level. In other words, companies incurred high tax payment in Vietnam fishery and aquaculture sector like borrowing more debt and vice versa. This is consistent with the authors’ hypothesis that the firms with higher taxes will utilize more debts to be beneficial from tax shield and matches with trade-off theory which stated that firms will seek to maintain an optimal capital structure by balancing between benefits and costs of capital. Therefore, when using the loan, the effect of the tax or the tax shield will "reduce" the corporate income tax, so the relationship between the tax and 618
12. financial leverage is positive. The results are consistent with the results of prior experimental studies of Liansheng. W and Heng. Y (2009). Risk is statistically significant at 1% level of significance because p-value = 0 < 1%. With regression coefficient of 0.0014, the relationship between risk and financial leverage is positive. This result is contrary with the authors’ hypothesis on liquidity which stated that there is a negative relationship between risk and leverage in Vietnamese listed fishery and aquaculture firms. This could be explained by two reasons. Firstly, in Vietnam, there is an existence of a close-knit relationship between banks and firms so that the firms can borrow from banks without sufficient documents, collateral or even incur risks. Secondly, toward a developing security market like Vietnam stock market, fund is easier to raise from banks than from investors. It was demonstrated by the only 15% capital of firms provided by shares issuance while 32% capital funded by bank loans (Vietnam CFO Summit, 2011). Hence, even incurred high interest expense, companies have to attempt to borrow money from banks. Finally, the positive relationship between risk and financial leverage is confirmed by the results of some empirical studies of Linda H. Chen et al (1998), Jean J. Chen (2004), Friend and Lang (1988), Walsh and Ryan (1997) which found risk does have influences on financial leverage. 4.2. Assessment the level of importance of the factors To measure the impact of these factors on the dependent variable, the authors used standardized regression coefficient. The factor has the highest influence is the one with largest absolute value of standardized regression coefficient. From the table, it indicates that the size factor has the strongest influence on capital structure, the second is liquidity, third is the profitability factor. Risk stands at the fourth position, fifth was the asset tangibility. The sixth and seventh orders belong to growth opportunities and taxes, respectively. Table 6: The impact level of determinants on capital structure Indicator GROWTH LIQU PROFIT RISK SIZE TANG TAX Unstandardized regression 0.0373 -0.0406 -0.4249 0.0014 0.1205 -0.1417 0.0913 coefficient Standardized regression 0.0138 -0.0627 -0.0310 0.0196 0.1443 -0.0163 0.0118 coefficient Degree of 6 2 3 4 1 5 7 importance (Source: Authors’ calculation based on data of 19 F&A companies) 5. Conclusion and implications In this paper, by applying FEM modelon the data set of 152 observations which extracted from 19 fishery and aquaculture companies listed in the Vietnam stock market during the period from 2008 to 2015, the authors conducted an analysis to determine the relationship between capital structure and firms’ characteristics. 619
13. Firstly, a fundamental characteristic of Vietnamese F&A companies on capital structure is that they are using debt-financing with higher proportion than equity-financing. The debt-financing trend is on the uptrend with more and more assets purchased by money raised from debts. As can be seen, the majority of total debts is short-term debts. The ratio of short-term debt to total assets is continue to increase, next year’s ratio is higher than the previous year’s, while the ratio of long-term debt to total assets is continue to decline in 2009 -2014. The high-relying-on-debts capital structure not only could create many potential risks to companies, but also seems not to be attractive in investors ‘eyes. Firstly, liquidity risk, even default risk could be incurred by such companies due to the fact that the F&A sector nearly depends 100% on export. Therefore, when demand of international consumers drops, the revenue of the F&A companies will down and hardly to meet the obligations to debtholders. If the situation continues for a long time, bankruptcies of the firms are not avoided. Secondly, looking at the ROE which serves as a key metric on evaluation of an investments, it could be realized that after a fall in 2012 from a median of 12.3% to 5%, the ROE has increased and reached 7.73% in 2015. The increase mainly came from the growth of the total assets-to-total equity ratio (from 2.9x to 3.5x) while the drops on profit margin (1.4% to 0.9%) and assets turnover (1.2x to 0.9x) were recorded. With the ROE is just equal the interest rate while its determinants contain a lot of risks, it is clear that investments in such companies are not a bargain and will require carefully analysis before making decision. The dominance of debts in capital structure could be explained by the impact of the world financial crisis in 2008 - 2009 imposed a lot of pressure on commercial banks to tighten, even restrict borrowing. In 2008, under pressure from rising inflation and the impact of anti-inflation solutions of the government, the lending interest rates of commercial banks on the market had been fluctuating abnormally and caused turmoil in the economy, especially enterprises were the most affected. Even, it is hardly to forget the scene that people queued up to withdraw money from a bankin which interest rates were low to save in other banks with high interest rates because the interest rate was pushed up continuously. The highest level recorded were 19-20/year. Accordingly lending rates were pushed to a maximum interest rate of 21%/year. The credit appraisal of loans was also tightened up with strict requirements on documents and collaterals. Therefore, not only F&A companies but also other enterprises had to adjust investment projects, delayed expansion plans, and put in priority utilizing short-term borrowing with favored interest rate and flexible requirements on collateral instead of long-term borrowing with higher rate and tougher requirements. Although in the last 6 months of 2008, the situation was enhanced slightly with the effort of State bank of Vietnam in loosing monetary policy, for example 5 times decreasing of prime interest rate within 3 months, 3 times altering of the reserve requirement as well as launching stimulus packages worth $ 1 billion which focusing on 4% interest rate subsidy for businesses borrowers. However, the effort was not enough and togetherwith the recession of the world economy, a lot of Vietnam enterprises including some F&A companies were unable to 620
14. approach capital resources from banks, failed to complete obligations with banks, and even, incurred bankruptcy. Also influenced by the world financial crisis as well as the over- controlled development in the recent years, belief of investors in Vietnam stock market incurred a significantly declined which led to the decrease in liquidity of the market. As a consequence, the attraction of capital for the F&A companies on the stock market was very difficult. In order to stabilize the stock market, State Capital Investment Corporation were allowed to buy high liquidity stocks. The State Securities Commission adjusted the daily trading bands on the stock market an unprecedented four times in an effort to prop up the market. The 2 solutions cooperated with the Vietnamese Government's $6 Billion stimulus package were successful in stopping the fall of VNINDEX in March 2009 and stimulated VNINDEX to increase again after that. In other words, the faith of investors on the market was recovered and cash flow began to re-flow to the market. Practically, there are many factors affecting the capital structure of the business which will vary in different specific conditions and under different trends. Specifically, for the Vietnam fishery and aquaculture sector, factors and their trends that affect capital structure of listed companies are as follow: growth opportunities, firm size, risks and taxes are positively related to financial leverage; on the contrary, profitability, assets tangibility and liquidity are negatively related to financial leverage. Additionally, regarding to the importance level of the factors, the size factor has the strongest influence on capital structure, while the least influencer on capital structure is taxes.Therefore, depending on their conditions, some companies could increase their sizes and improve the growth opportunities via raising funds in equity or bonds. The corporate bonds in Vietnam are not popular and still have space to develop. Moreover, the firms should employ professional investment banks to build appropriate capital structure as well as represent such companies in seeking, raising funds domestically and especially in international. Finally, the findings can increase the understanding about capital structure choice and may be used by companies’ executives in building an optimal capital structure for each phases of their business cycle. The lack of a variable representing for the effects of the global financial crisis from 2008 on Vietnam F&A companies as well as the availability of financial data were major limitation of the study. REFRENCES VIETNAMESE 1. Đặng Thị Quỳnh Anh và Quách Thị Hải Yến (2014), “Các nhân tố tác động đến cấu trúc vốn của doanh nghiệp niêm yết trên Sở Giao dịch Chứng khoán TP.HCM (HOSE)”, Tạp chí Phát triển và Hội nhập, Số 18 (28), pp. 34-39. ENGLISH 1. Ali, M.S., Yadav, R., Jamal, A. (2013), Theories of capital structure: Analysis of Capital Structure Determinants, International Research Journal of Management Science and Technology, Vol. 4, Issue 3, pp. 695-704 621
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