Does COVID-19 affect small and medium enterprises’ capital structure in vietnam?

Abstract

This study estimates the effect of COVID-19 on listed small and medium enterprises’ capital structures in Vietnam from 2010 to 2020 by a dynamic panel model with 825 observations. Conducting the generalized method of moments, the findings show that COVID-19 is a significant factor affecting small and medium enterprises’ capital structures. The current results are explained based on the signalling theory. Although the findings are consistent with the previous empirical studies indicating the capital structure and exploring its determinants in diverse ways, these studies are interpreted based on agency theory, pecking of order, trade-off theory. Furthermore, our results are robust to a series of endogeneity checks using an alternative method of regression.

Keywords:

• capital structure
• COVID-19
• signalling theory
• Vietnam

JEL Classifications:

• D24
• J11
• L21

PUBLIC INTEREST STATEMENT

Capital structure refers to the specific mix of debt and equity used to finance a company’s assets and operations. This study estimates the effect of COVID-19 on listed small and medium enterprises’ capital structures in Vietnam from 2010 to 2020 by a dynamic panel model with 825 observations. Conducting the generalized method of moments, the findings show that COVID-19 is a significant factor affecting small and medium enterprises’ capital structures. The current results are explained based on the signalling theory. Although, the findings are consistent with the previous empirical studies indicating the capital structure and exploring its determinants in diverse ways, these studies are interpreted based on agency theory, pecking of order, trade-off theory. Furthermore, our results are robust to a series of endogeneity checks using an alternative method of regression.

Disclosure statement

No potential conflict of interest was reported by the author.

Additional information

Notes on contributors

Quoc Trung Nguyen Kim

Nguyen Kim Quoc Trung is currently a lecturer of the Faculty of Accounting–Auditing; the University of Finance – Marketing, Vietnam. He is interested in researching the banking sector and finance and accounting. His fields of research and teaching are banking, finance, and governance. He has written a total of some articles in various international journals and conferences, including International Journal of Economics and Finance Studies, Cogent Business & Management, International Journal of Interdisciplinary Organizational Studies; and has served as a reviewer of some international journals listed in Scopus, such as Cogent Economics and Finance; International Journal of Law and Management; Journal of Financial Services Marketing; International Journal of Asian Business and Information Management