Tác động của sở hữu cổ phần bởi nhà quản lý tới cấu trúc vốn trong các doanh nghiệp tại Việt Nam

Nội dung text: Tác động của sở hữu cổ phần bởi nhà quản lý tới cấu trúc vốn trong các doanh nghiệp tại Việt Nam

1. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 THE IMPACT OF MANAGERIAL OWNERSHIP ON CAPITAL STRUCTURE OF FIRMS IN VIETNAM: EMPIRICAL EVIDENCE FROM NON-FINANCIAL LISTED FIRMS ON HOSE TÁC ĐỘNG CỦA SỞ HỮU CỔ PHẦN BỞI NHÀ QUẢN LÝ TỚI CẤU TRÚC VỐN TRONG CÁC DOANH NGHIỆP TẠI VIỆT NAM Vu Thi Minh Thu, Nguyen Ha Linh, Dinh Thuy Dung National Economics University vuminhthu.neu@gmail.com ABSTRACT This research focuses on examining the impact of the managerial ownership on the choice of capital structure of Vietnamese firms. Managerial ownership isamong the most crucial corporate governance's componentsand are supposed to be relevant in determination of the company's financing decision. The research usesquantitative method to investigate and explain the causal relationships between the two factors. Data setis collected for more than 300 firms listed in Ho Chi Minh Stock exchange in Vietnam to test the regression model. The positive and significant relationship is found between managerial ownership and capital structure. Keywords: Managerial ownership, capital structure, corporate governance, debt to equity ratio. TÓM TẮT Nghiên cứu tập trung vào tìm hiểu ảnh hưởng của cổ phần sở hữu bởi các nhà quản trị tới sự lựa chọn về cấu trúc vốn của các doanh nghiệp Việt Nam. Sở hữu của nhà quản lý là một trong những thành phần cốt lõi thuộc quản trị công ty và đã được nhiều nghiên cứu chứng minh là một trong những yếu tố quyết định tới cấu trúc vốn của doanh nghiệp. Bài viết dựa trênphương pháp nghiên cứu định lượng để quan sát và giải thích mối quan hệ nguyên nhân - kết quả trên. Dữ liệu của nghiên cứu được thu thập cho hơn 300 doanh nghiệp niêm yết trên sàn giao dịch chứng khoán thành phố Hồ Chí Minh. Kết quả của mô hình hồi qui cho thấy mối quan hệ có ý nghĩa và cùng chiều giữa tỷ lệ cổ phần sở hữu của các nhà quản trị tới quyết định về việc sử dụng nợ vay trong các doanh nghiệp tại Việt Nam. Từ khoá: Sở hữu của nhà quản lý, cấu trúc vốn, quản trị công ty, tỷ lệ nợ trên vốn chủ sở hữu. 1. Introduction For many years, there has been a large amount of academic discussions including both theories and empirical researches studying the existing of the optimal capital structure as well as the factors influencing the choice of capital structure of firms. Until now, managers have been facing with questions of the best company's capital structure because it includes various considerations on different aspects such as the firm's cost of capital and liquidation. The concept of corporate governance appears to be closely related with the financing pattern of a firm because they all affect the firm's performance. From narrow perspective, corporate governance centres around the topic of company management. Agency theory is the early theory that urges the appearance of corporate governance and also proposes the relationship between corporate governance and capital structure. According to Watson & Head (2016), agency itself can manifest in the firm's financing decision. Equity finance is preferred by managers over debt finance due to the lower interest payment although it will make the WACC of the company increase, which is unexpected from the shareholders' viewpoint. 118
2. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Recently, empirical studies on relationship of firm's corporate governance and capital structure have largely been explored by a lot of researchers in different countries. Detthamrong, Chancharat & Vithessonthi (2017) found the relationship between corporate governance, capital structure and firm's performance in Thailand. The direct impacts of firm's age and corporate governance's features on both decision of using debt and how much debt to employ were also supposed by Kieschnick & Moussawi (2018). Managerial ownership is considered to be one of key corporate governance's features that have strong impact on the firm’s choice of capital structure. From the command model before 1980s, Vietnam's economy has been transforming to market – oriented approach thanks to the introduction of the comprehensive economic reform (Batten & Vo, 2015). These constant economic reforms result in recently strong developments in Vietnamese equity and bond market especially the development of stock market, which gives firms more options to raise finance for their investments (Tai, 1998). According to a report of Vietnamese Ministry of Finance, companies with high debt - to - equity ratio are mainly small companies because of weak economic potential and limited access to capital mobilization channels, their loans is mainly based on commercial banks. Ho Chi Minh stock exchange (HOSE)is the first stock exchange in Vietnamese, which is established in 2000 with just only 4 firms listed. After nearly two decades, a strong development of Vietnamese stock market is witnessed in terms of both number ofcompanies listed and total trading volume. It is currently the largest stock exchange in Vietnam with 63– member securities companies and more than 300 firms listed, which are considered the best companies in terms of corporate governance in Vietnam (Vo, 2017). This research studies the impact ofmanagerial ownership on the decision on capital structure of non-financial listed firms inHOSE. The research is motivated by several perspectives. Firstly, it is built on a growing literature studying capital structure decision of the companies. It is well established that the companies’ capital structure is determined by various factors including board size, board independence, board gender, managerial ownership. However, different firms behave differently depending on the particular context in which they operate. Secondly, although there are many studies researching the choice of Vietnamese firms on their capital structure, only few of them investigate the influences of corporate governance’s features on capital structure. This research, therefore, will contribute to the current literature as it provides further understanding of the relationship between corporate governance and capital structure of firms in emerging markets of Vietnam. 2. Literature review The firm's capital structure (also called the capitalization) refers to the resources of financing employed by the firm (Kent Baker, Gerald & Martin, 2011). In details,it is the permanent pattern of financing represented by long – term debt, shareholder' equity andpreferred stock (Weston and Copeland, 1992). In addition, capital structure can include other itemssuch as pension-fund liabilities, deferred taxes, and intermediate – term loans (Capital structure, 2018). There are some main theories to the company’s best capital structure: The traditional approach; Miller and Modigliani (I and II) approach (Also known as the net income and corporate tax approach); And trade – off theory. All of these theories try to explain the relationship between the company’s gearing levelandits cost of capital based on the conclusion that debt finance is always cheaper thanequity finance. 119
3. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 The traditional approach Miller and Modigliani (I) Figure 1: The traditional approach and Miller & Modigliani (I) Source: Watson & Head, 2013 The traditional approach andMiller and Modigliani (I): The traditional theory argues that the firm's optimal capital structure does exist at a reasonable level of gearing (Represented as point B in Figure 1) as the benefit of cheaper debt outweighing any increase in the cost of the remaining equity finance. Whereas, in Miller and Modigliani (I), the WACC of a business is suggested to remain unchangedbecause the benefit of using an increased level of cheaper debt is exactly offset by the increasing cost of the company’s equity finance (Figure 2.1) (Watson & Head, 2013). Miller and Modigliani II: Modigliani and Miller proposed the theory II that the company's WACC decreases as the business gears up by replacing equity with debt thanks to the tax shield advantage. Trade – off theory: This theory was first introduced by Kraus and Litzenberger in 1973. It argued that deadweight costs of financial distress and bankruptcy (Off – setting costs) are threats that firms should consider while making use of tax shield’s benefit of debt (Kent Baker, Gerald & Martin, 2011) and balance should be made by firms between the benefit of tax shield of debt against cost of financial distress (Kent Baker, Gerald & Martin, 2011). Pecking-order Theory: Financing sources are ranked by this theory according to the degree that information asymmetry affect them, where internal sources of finance exhibit the lowest and equity finance the highest adverse selection costs. Accordingly, profitability of firmsseems to be inversely associated with debt finance and retained earnings are favoured over external sources of finance (Suto, 2003). More specifically, retained earnings will be the most favourite choiceof managers to finance the firm's assets, followed by debt the last option is equity finance (Goyal, n.d.). The theories of capital structure do not give definitive answers to crucial issues to how firms should be financed. Therefore, there are many researches which have been carrying on to find the determinants of a company’s capital structure. The common factorsstudied among these are: Industry median leverage, liquidity, profitability, firm size, market-to-book assets ratio, expected inflation(Frank & Goyal, 2009). A number of studies have been conducted to research the influence of corporate governance on a firm's financing choices.There is not a single component of corporate governance influencing capital structure. Haque, Arun & Kirkpatrick (2011) found that firm-level Corporate Governance Index (constructed by the model of ownership, rights of shareholders, the board's independence and responsibilities,disclosures and duties towardsfirm's stakeholders), ownership concentration, firm's size, growth and profitability have positive influence on capital structure. The study of the relationship was also carried out in Thailand for different sizes of firms. In average firms in Thailand, corporate governance components(Board's size and independence, size of audit committee, female directorship, CEO duality, ownership managerial, andreputation of audit firm) is concluded to have no impact on 120
4. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 capital structure (Detthamrong, Chancharat, & Vithessonthi, 2017). In contrast, capital structure has positive relationship with board independence but negative relationship with audit committee size in large firms in Thailand. For small firms in Thailand, more female directors means higher financial leverage and small firms with CEO duality have lower leveragethan the ones without CEO duality. For most of the empirical studies on the corporate governance and capital structure’s relationship, the researchers adopted positivist stance and deductive research approach, carrying the quantitative research on the causal relationships between variables. The major corporate governance covers the discussion over directors and board structure (the size, components, roles, duties of the board) which is organized and structured differently according to different corporate entities in different countries (Mallin, 2016) and managerial ownership is among the most crucial components. Managerial ownership relates to the shares owned by directors, their spouses and children. If directors hold shares in their firm, they are less likely to consume additional resources or investing in the ineffective project. There fore, managerial ownership issupposed to be an effective wayto decrease agency conflict and is one of the mostcrucial corporate governance's features. Higher level of managerial ownership is, higher level of debt finance is used (Jensen & Meckling, 1976). This view is also supported by the research of Akram, Zhang & Ramiz-Ur-Rehman (2017) when they found that managerial ownership has positive impact on capital structure.Research of Granado‐ Peiró & López‐ Gracia (2017) in Spainreveals the influence of managerial ownership on the firm’s financing decision. They found that when the managerial ownership’s levelisbelow 39.5%, managers’actionsarealigned with the other shareh olders’ interest; level of debt usedisobservedto increaseas the level of managerial ownership increases. To investigate the impact of the factor managerial ownership on the choice of capital structure of firms in Vietnam, the null - hypothesis is proposed as follow: Managerial ownership has no impact on capital structure (D/E ratio) 3. Research method As analysed above, the main purpose of the research is to explain the managerial ownership and capital structure’s causal relationship. To test these hypotheses, the pooled regression model is employed in the study. Besides board size and managerial ownership, previous studies also found some of corporate governance components and other factors that have impact on the capital structure including firm size, profitability, liquidity and growth opportunity. Hence, the hypotheses are formulated, using capital structure as the dependent variable; board size and managerial ownership as the explanatory variables; liquidity, firm size, profitability and growth opportunity as the control variables. The models developed as follow: Model: DRit = β0+ β1MOWNit+ β2BSit + β3LIQit + β4FSit + β5 ROAit + β5 GROWit + Ɛit The summary of variables coding and definition are shown in figure 1 Table 1: Variable definition Variable name Code Variable definition Capital structure DR Debt to equity ratio (total long-term debt to total equity ratio) Managerial Ratio of number of share owned by directors, their spouses and children MOWN ownership to total share of the firm (%) Board size BS Total number of directors in the board. Firm size FS Total assets 121
5. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Profitability ROA Ratio of profit before taxes to total assets (%) Liquidity LIQ Ratio of current assets to current liabilities. Growth Tobin’s Q - The ratio of market value of equity plus book value of debts GROW opportunity to the total assets it Firm/year Firm i, year t In the research of Chang, Chen, & Liao (2014) studying reliably important determinants of capital structure in china, the researchers compared the measure and definition of variables between previous studies on the similar topics us to identify reliable and robust option. The preference and optimal proxy for firm size and profitability is total assets and ratio of profit before taxes to total assets, respectively. Growth opportunity can be measured by asset growth, sales growth or Tobin's Q (The market to book value of total assets ratio or the ratio of market value of equity plus book value of debts to the total assets). According to Vo (2017), Tobin's Q is considered to be a better indicator for the firm’s future growth as it reflects the firm’s market value and the investors’ valuation to the firm. This ratio is also widely used as a reliable proxy for firm growth opportunity in many studies such as in the research of Rajan and Zingales (1995), Huang and Song (2006), Frank & Goyal (2009), Chang, Chen, & Liao (2014), and Vo (2017). Similarly, there are some choices to measure liquidity of firm. It can be taken by the ratio of current assets to current liabilities (Current ratio) or the ratio of current assets minus inventories to current liabilities (Quick ratio). Following the research of Akram Naseem, Zhang, Malik, & Ur-Rehman (2017) and Vo (2017), this research used the first ratio as the proxy for firm liquidity. All the data needed for the research including ratio for capital structure, board size, managerial ownership ratio, total assets, ratio of return on equity and liquidity will be collected from public reports of non-financial listed firms on HOSE from 2014 to 2019. The detailed explanation of data collection method as well as data analysis will be presented in the next sections. Most of the data needed to calculate variables will be collected from the listed companies’ annual audited financial statements and corporate governance report which are publicly published on the official website of HOSE stock exchange ( 4. Data analysis and interpretation 4.1. Descriptive Statistics The research employs the set of data of public firms listed on HOSE in the period from 2015 to 2019. The data of banks and financial companies are excluded in the data set due to their special financial behaviors and business nature (King & Santor, 2008). The last sample consists of 336 companies with 1467 observations, which come from 10 industries including consumer discretionary, consumer staples, diversified financial, industrials, utilities, energy, health care, information technology, real estate, and insurance. The data are taken from the companies’ annual audited financial statements (balance sheets, income statements) and their corporate governance reports and then used to calculate variables measuring: Capital structure, board size, managerial ownership, firm size, profitability, liquidity and grow opportunity of a firm. Figure 2 is the summary statistics of the data for the research’s sample over the period studied including maximum, minimum values, average and standard deviation of both dependent as well as explanatory and control variables. 122
6. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 Table 2: Data description of variables Observation Minimum Maximum Mean Std. Deviation Unit DR 1467 0.00 4.89 0.33 0.57 Times BS 1467 1.00 14.00 4.02 1.88 People MOWN 1467 0.00 73.12 6.04 11.27 % FS 1467 122,778 213,792,057 4,055,902 11,774,131 Million VND LIQ 1467 0.26 229.78 3.00 8.67 Times ROA 1467 -164.54 99.38 7.47 11.45 % GROW 1467 0.16 9.04 1.14 0.67 Times Valid N 1467 1467 1467 1467 1467 From the figure 2, we can see that in the period of 2015 to 2019, the lowest capital structure of listed firms in HOSE is 0.00, the highest is 4.89, and the average level is 0.33. According to Department of Corporate Finance Policy - Ministry of Finance (2018), this level of long term debt to total equity ratio of firms in Vietnam is quite low compared to other countries in the same region, and is also decreasing compared to the previous period of 2011 - 2015. One of the possible macro- economic reasons to explain this is that Vietnamese enterprises limit their use of loans in this time due to mobilizing interest rate of 7 - 8% per annum and the interest rate of return to the bank is over 10% per year while the return on capital is only 3 - 6%. The low rate of return on capital decline is due to the State policies, especially monetary policy, most of them are short-term. These frequent changes in macroeconomic policy and volatile economic environment of emerging markets also result in the banks’ reluctance to give long term credit borrowing. In addition to this, from January 1st, 2016, the businesses’ debt to equity ratio will be restricted if companies want their interest expenses to be deducted when determining corporate income tax (Phuong,2015). Therefore, the choice is using other alternative sources of finance including equity and especially short - term debts. Themanagerial ownership received value from 0 to 73.12% with average percentage of 6.04% for non – financial firms listed on HOSE. Accordingly, some of the directors do not even own any shares of their companies. This level of managerial ownership is the same with that of firms in Spain, which is the average level in comparison with firms in other countries (Granado‐Peiró & López‐Gracia, 2017). The high value of MOWN’s standard deviation of 11.27 shows the big gaps and differences between the managerial ownership rates of companies and their average figure. The smallest firm in the research’s sample has the total assets’ value of 122,778 million VND while the largest one owns the total assets of 213,792,057 million VND. It is the HOSE listed requirements that a listed company should have charter capital of at least 120,000 million VND. On average, Vietnamese non – financial listed firms in HOSE have size of 4,055,902 million VND. The biggest average firm size belonged to insurance sector, following by that of energy and real estate industry. 4.2. Result and Discussion Figure 3 represents the matrix of correlation results amongst variables. It shows correlation coefficients between explanatory and control variables for the sample of 1467 observations. As for thecorrelation coefficients, the values are generally below 0.50 (the highest correlation coefficient among them is 0.261), it therefore can be concluded that there is no issue of serious multi-co linearity among them. 123
7. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 The research employs the hierarchy linear regression function as the suitable functions to test the model. The results for the regression model including both t-test and f-test are shown in the figure 3 and 4. Table 3: Correlations between variables DR BS MOWN FS LIQ ROA GROW DR Pearson Correlation 1 .472 .400 .149 -.210 -.210 Sig. (2-tailed) 0.000 0.000 0.000 0.000 0.000 BS Pearson Correlation .472 1 .261 .192 -.083 -.083 Sig. (2-tailed) 0.000 0.000 0.000 0.001 0.001 MOWN Pearson Correlation .400 .261 1 .056* -.139 -.139 Sig. (2-tailed) 0.000 0.000 0.033 0.000 0.000 FS Pearson Correlation .149 .192 .056* 1 0.008 0.008 Sig. (2-tailed) 0.000 0.000 0.033 0.756 0.756 LIQ Pearson Correlation -.067* -.091 -.052* -0.039 01 0.039 Sig. (2-tailed) 0.010 0.000 0.046 0.131 0.139 0.139 ROA Pearson Correlation -.210 -.083 -.139 0.008 0.039 1 Sig. (2-tailed) 0.000 0.001 0.000 0.756 0.139 GROW Pearson Correlation -.102 -0.013 -.092 .159 0.003 .437 1 Sig. (2-tailed) 0.000 0.629 0.000 0.000 0.914 0.000 Observation 1,467 1,467 1,467 1,467 1,467 1,467 1,467 . Correlation is significant at the 0.01 level (2-tailed). *. Correlation is significant at the 0.05 level (2-tailed). It can be seen from figure 4 that R2 andadjusted R2, coefficient of determination of linear regression outcomes are 0.328 and 0.325, respectively, that means 32.5% of the variance in the dependent variable Capital structure (DR) could be explained by the six explanatory and control variables in the model. Overall the linear regression model has a good fit and seems highly significant as evident from the significance (Sig.) of 0.000. Table 4: Model Summary Model R R Square Adjusted R Square Std. Error of the Estimate 1 .552a 0.305 0.304 0.479 2 .573b 0.328 0.325 0.471 a. Predictors: (Constant), MOWN b. Predictors: (Constant), MOWN, BS, GROW, LIQ, FS, ROA c. Dependent Variable: DR Overall, the regression test has the same result predicted by correlation matrix as board size, managerial ownership and firm size have positive effect on capital structure while the others (Liquidity, profitability and grow opportunity) have negative influence on capital structure (Figure 5). Among them, liquidity and grow opportunity show insignificant result as their P-value > 0.1. 124
8. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 As the positive andsignificant influence of managerial ownership on capital structure is found for firms in Vietnam, it can be interpreted that the more shares are owned by directors and their family, higher level of debt will be used to finance the company’s assets. This result is also supported by some of previous studies. Jensen & Meckling (1976) argued that higher holdings of CEO, managers, their spouse, children point towards higher use of debt and it is the indication of alignment of interest of shareholders and management (2006). Berger, Ofek & Yermack (1997) also revealed a significant positive relationship between CEO’s holdings and level of debt. Similarly, Bokpin and Arco (2009) concluded that managerial holdings have a significant positive impact on the choice of using debt in Ghanaian listed firms. The conclusion that managerial holdings are considered to be an effective tool against agency problems is drawn in the research of Akram, Zhang & Ramiz-Ur-Rehman (2017) studying about capital structure determinants of firms in Pakistan. However, some of opposite results also found about this relationship. Fosberg (2004) while studying US corporations suggested that managers will prefer their personal incentives over the interests of shareholders, he therefore proposed an inverse significant relationship between managerial ownership and debt - to - equity ratio. A study of in China has also revealed negative correlation between managerial holdings and leverage (Huang & Song, 2006). The reason for the mixed empirical findings found might be mainly because of the different characteristics between firms studied in different countries. The finding of the research confirms the prediction stated on the positive relationship between managerial ownership and capital structure and rejects the hypothesis 1 (H1) proposed that board size has no impact on capital structure. Similarly, the positive and significant impact of board size on capital structure is also revealed in the research. Larger board size of director means the higher level of long – term debt can be employed to finance the firm’s asset. This conclusion is also supported from previous study of Jensen (1986) with findings based on the idea of ''Agency theory-based explanation of capital structure'' mentioned in literature review section. Similarly, while studying the relationship between corporate governance and capital structure decisions of the Chinese listed firms, Wen, Rwegasira, & Bilderbeek (2002) concluded that larger board size is associated with higher debt, either to improve the firm's value or because the larger size prevents the board from reaching a consensus on decisions, indicating a weak corporate governance system. Table 5: Coefficient Unstandardized Standardized Collinearity Statistics Model Coefficients Coefficients t Sig. B Std. Error Beta Tolerance VIF (Constant) -0.242 0.030 -8.183 0.000 1 MOWN 0.015 0.001 0.297 13.180 0.000 0.932 1.073 (Constant) -0.163 0.037 -4.417 0.000 MOWN 0.014 0.001 0.279 12.441 0.000 0.916 1.091 BS 0.115 0.007 0.375 16.501 0.000 0.893 1.120 FS 3.112E-15 0.000 0.064 2.868 0.004 0.931 1.074 2 LIQ -0.001 0.001 -0.010 -0.480 0.631 0.989 1.011 ROA -0.007 0.001 -0.135 -5.256 0.000 0.696 1.437 GROW -0.008 0.022 -0.009 -0.342 0.732 0.687 1.456 125
9. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 The research also found the positive andsignificant effect of firm size on its capital structure. This positive impact is consistent with the suggestion in agency theory, trade - off theory and similar to the findings of previous studies (Marsh, 1982; Whited, 1992; Booth et al., 2001; Vo, 2016). Strikingly, also shown in figure 5, the negative relationship is found between the other three control variables (Liquidity, profitability and growth opportunity) and capital structure. The direction and intensity of these links tends to different according to different theories. The result of negative impact of liquidityand growth opportunity on capital structure of firms in Vietnam supports the argument of agency theory which supposes thatcreditors tend to reduce the debt financing limit available to firms when the agency costs of liquidity are high (Myers and Rajan, 1998) and firms with high growth opportunities tend to retain financial flexibility in order to be able to borrow more in subsequent years (Myers 1977; La Rocca et al., 2009).In addition to this,as mentioned above,because of Vietnamese government’ strict policy on debt to equity ratio (from January 1st2016), Vietnamese firms are limited to use more debt to fund their quick growth. 5. Conclusion In brief, this is a quantitative research explaining the influence of the key corporate governance’s component - managerial ownership on the decision of capital structure of vietnamese listed firms. the results of regression model suggest that managerial ownership might be the good determinant for capital structure of listed firms in vietnam. as the result, the hypothesisis rejected. besides, among control variables, apart from the statistically non - significant impact of two factors liquidity and growth opportunity, it can be concluded that board size and firm size are positively correlated with capital structure while the negative impact is found between profitability and capital structure. the revelations are also supported by a number of previous theories and studies carried out in different countries such as argument of agency theory, trade - off theory and researches conducted by jensen & meckling (1976), adam and mehran (2003), bokpin & arco (2009) and akram, zhang & ramiz-ur-rehman (2017). Beside these significant findings, the research also has its own limitations regarding the proxy of measuring variables. the choice of variable measures in the research are deliberately considered in order to find the best proxies. nevertheless, there are different ways to measure one variable, each of them has its own value and significance. hence, it is hard to choose a proxy which can be complete substitute for one variable. one more problem of the research might be about the data collection stage. although the research sample of 336 listed companies (accounts for more than 90% listed company in hose) can be considered to be the representative sample, but there is still a chance that the result is affected due to the data missing of some observations. These limitations mentioned above come from many reasons which are both objective and subjective. however, both achievements and limitations of the research will become the new motivations for the researcher to carry on further studies related to this interesting topic. REFERENCE [1] Akram Naseem, Zhang, Malik, & Ramiz-Ur-Rehman. (2017). Capital Structure and Corporate Governance. The Journal of Developing Areas, 51(1), 33-47. [2] Detthamrong, Chancharat, & Vithessonthi. (2017). Corporate governance, capital structure and firm performance: Evidence from Thailand. Research in International Business and Finance, 42, 689-709. [3] Fosberg, R. H. (2004). Agency problems and debt financing: leadership structure effects. Corporate Governance, 4(1), 31-38. doi:10.1108/14720700410521943. [4] Frank, M., & Goyal, V. (2009). Capital Structure Decisions: Which Factors Are Reliably Important? Financial Management, 38(1), 1-37. 126
10. INTERNATIONAL CONFERENCE FOR YOUNG RESEARCHERS IN ECONOMICS & BUSINESS 2019 ICYREB 2019 [5] Gompers, P., Ishii, J., & Metrick, A. (2003). Corporate Governance and Equity Prices. The Quarterly Journal of Economics, 118(1), 107-155. [6] Goyal, V. (n.d.). Traditional theories of capital structure: Trade-off versus pecking order. [7] Granad Peiró, N., & López Gracia, J. (2017). Corporate Governance and Capital Structure: A Spanish Study. European Management Review, 14(1), 33-45. [8] Handoo, & Sharma. (2014). A study on determinants of capital structure in India. IIMB Management Review, 26(3), 147. [9] Haque, F., Arun, T., & Kirkpatrick, C. (2011). Corporate governance and capital structure in developing countries: A case study of Bangladesh. Applied Economics, 43(6), 673-681. [10] Kieschnick, & Moussawi. (2018). Firm age, corporate governance, and capital structure choices. Journal of Corporate Finance, 48, 597-614. [11] King, & Santor. (2008). Family values: Ownership structure, performance and capital structure of Canadian firms. Journal of Banking and Finance, 32(11), 2423-2432. [12] Monks, R., & Minow, N. (2011). Corporate governance (5th ed.). Chichester: Wiley. [13] Morellec, E., Nikolov, B., & Schürhoff, N. (2012). Corporate Governance and Capital Structure Dynamics. Journal of Finance, 67(3), 803-848. [14] Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147-175. [15] Ozkan, A. (2001). Determinants of Capital Structure and Adjustment to Long Run Target: Evidence From UK Company Panel Data. Journal of Business Finance & Accounting, 28(1‐ 2), 175-198. [16] Pike, Neale, Linsley, Neale, Bill, & Linsley, Philip. (2015). Corporate finance and investment: Decisions and strategies. (Eighth edition. / Richard Pike, Bill Neale, Philip Linsley. ed.). Harlow: Pearson Education Limited. [16] Tricker, R., & VLeBooks. (2015). Corporate governance: Principles, policies, and practices (Third ed.). Oxford: Oxford University Press. [17] Tsoukas, Knudsen, Tsoukas, Haridimos, & Knudsen, Christian. (2005). The Oxford handbook of organization theory. Oxford: Oxford University Press. [18] Uchida, K. (2011). Does corporate board downsizing increase shareholder value? Evidence from Japan. International Review of Economics and Finance, 20(4), 562-573. [19] Vo, X. (2017). Determinants of capital structure in emerging markets: Evidence from Vietnam. Research in International Business and Finance, 40, 105-113. [20] Watson, Head, Head, Antony, & VLeBooks. (2016). Corporate finance: Principles and practice (Seventh ed.). Harlow: Pearson Education Limited. [21] Wen, Y., Rwegasira, K., & Bilderbeek, J. (2002). Corporate Governance and Capital Structure Decisions of the Chinese Listed Firms. Corporate Governance: An International Review, 10(2), 75-83. 127