Open AccessDebt maturity structure and firms’ performance: Evidence from Vietnam
Author(s) -
Hoang D. Le
Publication year - 2020
Publication title -
international journal of social science and economics invention
Language(s) - English
Resource type - Journals
ISSN - 2455-6289
DOI - 10.23958/ijssei/vol06-i03/196
Subject(s) - endogeneity , debt ratio , business , monetary economics , debt , stock exchange , maturity (psychological) , stock (firearms) , financial system , finance , economics , econometrics , mechanical engineering , psychology , developmental psychology , engineering
This paper investigates the impact of debt maturity structure on firms’ performance for all non-financial firms listed on Ho Chi Minh City Stock Exchange and Hanoi Stock Exchange between 2010 and 2017. We find that an increase in the ratio of long-term debt over total debt is associated with a decrease in firms’ performance. We also show that long-term debt financing can lead to a reduction in firms’ performance because it dampens the positive impact of the investment on firms’ performance. Our results are robust when we employ a System Generalized Methods of Moments to deal with endogeneity problems.