Abstract
Beginning with classical theories on finance, such as the capital structure theory, the trade-off theory of capital structure, and the pecking order theory, the literature shows a negative correlation between tax avoidance and institutional ownership with respect to the business cost of debt. However, the impact of tax avoidance and institutional ownership on corporate debt policy in Vietnam is an under-researched topic. The aim of the study is to identify the effect of those mentioned factors on business borrowing policy, using data on 207 companies listed on the Ho Chi Minh City Stock Exchange (HOSE) in Vietnam from 2008 to 2016. The study employs model proposed by Lim in 2009 to achieve mentioned research object with Feasible Generalized Least Squares (FGLS) method to overcome for any defection. The study results show no conclusive empirical evidence of a relationship between business’s cost of debt and tax avoidance and institutional ownership. This result contrasts with the conclusion in previous studies and can be explained by the characteristics of the funding market in Vietnam where financial organizations often focus on business results and management efficiency in making lending decisions and this characteristic is at no sign of change soon.
PUBLIC INTEREST STATEMENT
The impact of tax avoidance and institutional ownership on corporate debt policy in Vietnam is an under-researched topic. The paper aim is to identify the effect of tax avoidance and institutional ownership on cost of debt for listed firms in Vietnam borrowing. The study uses model proposed by Lim (Citation2009) for the research goal.
There is no conclusive empirical evidence of a relationship between business’s cost of debt and tax avoidance and institutional ownership. In contrasting previous studies, the findings can be explained by the characteristics of the funding market in Vietnam where financial organizations often focus on business results and management efficiency in making lending decisions.
Disclosure statement
No potential conflict of interest was reported by the author(s).
Additional information
Funding
Notes on contributors
![](/cms/asset/4698032e-d094-48cf-a460-6e63c1fc71db/oaef_a_2026005_ilg0001.jpg)
Pham Minh Vuong
Nguyen Minh Ha is the rector of Ho Chi Minh City Open University, Vietnam. His research interests include issues on finance and economic. He has published in various international journals.
Pham Minh Vuong is a lecturer Ho Chi Minh City Open University, Vietnam. His research interests are accounting and finance issues.
Tran Thi Phuong Trang graduates from Ho Chi Minh City Open University, Vietnam. She is currently working in a commercial in Vietnam.