THE DETERMINANTS OF CAPITAL STRUCTURE FOR VIETNAM’S SEAFOOD PROCESSING ENTERPRISES

The goal in this paper is to assess the determinant s of capital structure for Vietnam’s seafood processing enterprises (SEAs) in comparison with enterprises of other processing industries (DIFs). The result of this study was bas ed on applying Shumi Akhtar’s model (2005) [22] and Shumi Akhtar, Barry Oliver’s (2005) [23] and using data of 302 enterprises, including 63 in fisheries industry, across 5 years from 2004 to 2008. Total o bservations were 772, including 284 and 488 for models applied to seafood processing enterprises an d others respectively. The results show that capital structure differs bet ween SEAs and DIFs. Accordingly, size and collateral value of assets were found to be signifi cant determinants of capital structure for both SEA s and DIFs. For SEAs, profitability, growth, agency c osts and interest expense affect the capital struct u e and play a crucial role. Meanwhile, bankruptcy risk s and age of enterprises are essential determinants for DIFs. In relation to interaction effects, size and collateral value of assets are significant in explaining the differences in the capital structure of SEAs relative to that of DIFs. Finally, determi nants of capital structure rarely varied over the sample riod for both SEAs and DIFs. The findings suggest implications for Vietnam’s seafood processing enter prises (SEAs) on flexible usage of financial leverage. Specifically, to increase or decrease the lev l of financial leverage, SEAs need to take int o account size, collateral assets, profitability and growth rate of enterprises as well as recommend measures to cope with shocks in variations of bank interest rates.