Impact of debt maturity and cash holding on investment decisions in Vietnamese companies
Nội dung chính của bài viết
Tóm tắt
The study used data from 520 listed firms between 2004 and 2020 to ascertain the relationship between debt maturity, cash holding, and investment decisions in Vietnamese enterprises. The use of more conservative tactics results from the rise in agency costs. Increased cash holding encouraged businesses to employ internal resources to reduce external financing risks, favorably impacting investment decisions. The negative link between investment decisions and intangible assets indicates increased external funding costs. A high tax shield benefited the investment since it freed up financial flows for productive assets. The robustness test revealed that cash holding positively corresponds with investment decisions in consumer and technology enterprises and that technology firms are incredibly responsive to changes in debt maturity.
Chi tiết bài viết
Từ khóa
Cash holding, Debt maturity, Investment decision
Tài liệu tham khảo
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Aivazian, V. A., Ge, Y., & Qiu, J. (2005). Debt maturity structure and firm investment. Financial Management, 34(4), 107–119. https://doi.org/10.1111/j.1755-053X.2005.tb00120.x
Alhassan, A., & Naka, A. (2020). Corporate future investments and stock liquidity: Evidence from emerging markets. International Review of Economics & Finance, 65, 69–83. https://doi.org/10.1016/j.iref.2019.10.002
Almeida, H., & Campello, M. (2007). Financial constraints, asset tangibility, and corporate investment. The Review of Financial Studies, 20(5), 1429-1460. http://www.nber.org/papers/w12087
Almeida, H., Campello, M., & Weisbach, M. S. (2004). The cash flow sensitivity of cash. The Journal of Finance, 59(4), 1777-1804. https://doi.org/10.1111/j.1540-6261.2004.00679.x
Barclay, M. J., & Smith Jr, C. W. (1995). The maturity structure of corporate debt. the Journal of Finance, 50(2), 609-631. https://doi.org/10.1111/j.1540-6261.1995.tb04797.x
Barnea, A., Haugen, R. A., & Senbet, L. W. (1980). A rationale for debt maturity structure and call provisions in the agency theoretic framework. The Journal of Finance, 35(5), 1223-1234. https://doi.org/10.1111/j.1540-6261.1980.tb02205.x
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics, 48(2-3), 112-131. https://doi.org/10.1016/j.jacceco.2009.09.001
Brick, I. E., & Liao, R. C. (2017). The joint determinants of cash holdings and debt maturity: the case for financial constraints. Review of Quantitative Finance and Accounting, 48, 597-641. https://doi.org/10.1007/s11156-016-0567-z
Cao, D., Hyatt, H. R., Mukoyama, T., & Sager, E. (2017). Firm growth through new establishments. Available at SSRN 3361451. http://dx.doi.org/10.2139/ssrn.3361451
Carnes, C. M., Deb, P., & O'Brien, J. (2023). I want to marry rich: Why cash makes you a desirable partner. Journal of Management Studies. https://doi.org/10.1111/joms.12980
Dang, V. A. (2011). Leverage, debt maturity and firm investment: An empirical analysis. Journal of Business Finance & Accounting, 38(1‐2), 225-258. https://doi.org/10.1111/j.1468-5957.2010.02215.x
Diamond, D. W., & He, Z. (2014). A theory of debt maturity: the long and short of debt overhang. The Journal of Finance, 69(2), 719-762. https://doi.org/10.1111/jofi.12118
Do, T. V. T., & Phan, D. T. (2022). Debt maturity structure and investment decisions: Evidence of listed companies on Vietnam’s stock market. Cogent Economics & Finance, 10(1), 2024358. https://doi.org/10.1080/23322039.2021.2024358
Duong, H. N., Nguyen, J. H., Nguyen, M., & Rhee, S. G. (2020). Navigating through economic policy uncertainty: The role of corporate cash holdings. Journal of Corporate Finance, 62, 101607. https://doi.org/10.1016/j.jcorpfin.2020.101607
Graham, J. R. (2000). How big are the tax benefits of debt? The Journal of Finance, 55(5), 1901-1941. https://doi.org/10.1111/0022-1082.00277
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323-329. http://dx.doi.org/10.2139/ssrn.99580
Jensen, M. C., & Meckling, W. H. (2019). Theory of the firm: Managerial behavior, agency costs and ownership structure. In Corporate governance (pp. 77-132). Gower. http://dx.doi.org/10.2139/ssrn.94043
Kadapakkam, P. R., Kumar, P. C., & Riddick, L. A. (1998). The impact of cash flows and firm size on investment: The international evidence. Journal of Banking & Finance, 22(3), 293-320. https://doi.org/10.1016/S0378-4266(97)00059-9
Lee, C. C., & Wang, C. W. (2021). Firms' cash reserve, financial constraint, and geopolitical risk. Pacific-Basin Finance Journal, 65, 101480. https://doi.org/10.1016/j.pacfin.2020.101480
Lei, J., Qiu, J., Wan, C., & Yu, F. (2021). Credit risk spillovers and cash holdings. Journal of Corporate Finance, 68, 101965. https://doi.org/10.1016/j.jcorpfin.2021.101965
Malmendier, U., & Tate, G. (2005). CEO overconfidence and corporate investment. The Journal of Finance, 60(6), 2661-2700. https://doi.org/10.1111/j.1540-6261.2005.00813.x
Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147-175. https://doi.org/10.1016/0304-405X(77)90015-0
Nga, D. Q., Dien, P. M., Linh, N. T. C., & Tuoi, N. T. H. (2019). Impact of leverage on firm investment: evidence from GMM approach. In Beyond Traditional Probabilistic Methods in Economics 2 (pp. 282-295). Springer International Publishing. https://doi.org/10.1007/978-3-030-04200-4_22
Nguyen, A. T. L., Van Nguyen, D., & Nguyen, N. H. (2022). The relationship between financial decisions and equity risk. Heliyon, 8(8). https://doi.org/10.1016/j.heliyon.2022.e10036
Nguyen, V. H., Choi, B., & Agbola, F. W. (2020). Corporate social responsibility and debt maturity: Australian evidence. Pacific-Basin Finance Journal, 62, 101374. https://doi.org/10.1016/j.pacfin.2020.101374
Nnadi, M., Surichamorn, V., Jayasekera, R., & Belghitar, Y. (2022). Empirical analysis of debt maturity, cash holdings and firm investment in developing economies. International Journal of Finance & Economics, 27(3), 3345-3372. https://doi.org/10.1002/ijfe.2324
Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of Financial Economics, 52(1), 3-46. https://doi.org/10.1016/S0304-405X(99)00003-3
Ozkan, A., & Ozkan, N. (2004). Corporate cash holdings: An empirical investigation of UK companies. Journal of Banking & Finance, 28(9), 2103-2134. https://doi.org/10.1016/j.jbankfin.2003.08.003
Phan, D. T., & Nguyen, H. T. (2020). Factors affecting corporate investment decision: Evidence from Vietnamese economic groups. The Journal of Asian Finance, Economics and Business, 7(11), 177-184. https://doi.org/10.13106/jafeb.2020.vol7.no11.177
Ruiz-Porras, A., & Lopez-Mateo, C. (2011). Corporate governance, market competition and investment decisions in Mexican manufacturing firms. https://mpra.ub.uni-muenchen.de/28452/1/MPRA_paper_28452.pdf
Santoso, H. (2019). The impact of investment decision and funding on financial performance and firm value. Jurnal Ekonomi Bisnis dan Kewirausahaan, 8(2), 103-112. http://dx.doi.org/10.26418/jebik.v8i2.31153
Scherr, F. C., & Hulburt, H. M. (2001). The debt maturity structure of small firms. Financial management, 85-111. https://www.proquest.com/scholarly-journals/debt-maturity-structure-small-firms/docview/208187637/se-2?accountid=26990
Sheu, H. J., & Lee, S. Y. (2012). Excess cash holdings and investment: the moderating roles of financial constraints and managerial entrenchment. Accounting & Finance, 52, 287-310. https://doi.org/10.1111/j.1467-629X.2012.00500.x
Terra, P. R. S. (2011). Determinants of corporate debt maturity in Latin America. European Business Review, 23(1), 45-70. Doi. 10.1108/09555341111097982
Titman, S., Tompaidis, S., & Tsyplakov, S. (2004). Market imperfections, investment flexibility, and default spreads. The Journal of Finance, 59(1), 165-205. https://doi.org/10.1111/j.1540-6261.2005.00813.x
Virlics, A. (2013). Investment decision making and risk. Procedia Economics and Finance, 6, 169-177. https://doi.org/10.1111/10.1016/S2212-5671(13)00129-9
Zaheer, A., & Bell, G. G. (2005). Benefiting from network position: firm capabilities, structural holes, and performance. Strategic Management Journal, 26(9), 809-825. https://doi.org/10.1002/smj.482
Aivazian, V. A., Ge, Y., & Qiu, J. (2005). Debt maturity structure and firm investment. Financial Management, 34(4), 107–119. https://doi.org/10.1111/j.1755-053X.2005.tb00120.x
Alhassan, A., & Naka, A. (2020). Corporate future investments and stock liquidity: Evidence from emerging markets. International Review of Economics & Finance, 65, 69–83. https://doi.org/10.1016/j.iref.2019.10.002
Almeida, H., & Campello, M. (2007). Financial constraints, asset tangibility, and corporate investment. The Review of Financial Studies, 20(5), 1429-1460. http://www.nber.org/papers/w12087
Almeida, H., Campello, M., & Weisbach, M. S. (2004). The cash flow sensitivity of cash. The Journal of Finance, 59(4), 1777-1804. https://doi.org/10.1111/j.1540-6261.2004.00679.x
Barclay, M. J., & Smith Jr, C. W. (1995). The maturity structure of corporate debt. the Journal of Finance, 50(2), 609-631. https://doi.org/10.1111/j.1540-6261.1995.tb04797.x
Barnea, A., Haugen, R. A., & Senbet, L. W. (1980). A rationale for debt maturity structure and call provisions in the agency theoretic framework. The Journal of Finance, 35(5), 1223-1234. https://doi.org/10.1111/j.1540-6261.1980.tb02205.x
Biddle, G. C., Hilary, G., & Verdi, R. S. (2009). How does financial reporting quality relate to investment efficiency? Journal of Accounting and Economics, 48(2-3), 112-131. https://doi.org/10.1016/j.jacceco.2009.09.001
Brick, I. E., & Liao, R. C. (2017). The joint determinants of cash holdings and debt maturity: the case for financial constraints. Review of Quantitative Finance and Accounting, 48, 597-641. https://doi.org/10.1007/s11156-016-0567-z
Cao, D., Hyatt, H. R., Mukoyama, T., & Sager, E. (2017). Firm growth through new establishments. Available at SSRN 3361451. http://dx.doi.org/10.2139/ssrn.3361451
Carnes, C. M., Deb, P., & O'Brien, J. (2023). I want to marry rich: Why cash makes you a desirable partner. Journal of Management Studies. https://doi.org/10.1111/joms.12980
Dang, V. A. (2011). Leverage, debt maturity and firm investment: An empirical analysis. Journal of Business Finance & Accounting, 38(1‐2), 225-258. https://doi.org/10.1111/j.1468-5957.2010.02215.x
Diamond, D. W., & He, Z. (2014). A theory of debt maturity: the long and short of debt overhang. The Journal of Finance, 69(2), 719-762. https://doi.org/10.1111/jofi.12118
Do, T. V. T., & Phan, D. T. (2022). Debt maturity structure and investment decisions: Evidence of listed companies on Vietnam’s stock market. Cogent Economics & Finance, 10(1), 2024358. https://doi.org/10.1080/23322039.2021.2024358
Duong, H. N., Nguyen, J. H., Nguyen, M., & Rhee, S. G. (2020). Navigating through economic policy uncertainty: The role of corporate cash holdings. Journal of Corporate Finance, 62, 101607. https://doi.org/10.1016/j.jcorpfin.2020.101607
Graham, J. R. (2000). How big are the tax benefits of debt? The Journal of Finance, 55(5), 1901-1941. https://doi.org/10.1111/0022-1082.00277
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. The American Economic Review, 76(2), 323-329. http://dx.doi.org/10.2139/ssrn.99580
Jensen, M. C., & Meckling, W. H. (2019). Theory of the firm: Managerial behavior, agency costs and ownership structure. In Corporate governance (pp. 77-132). Gower. http://dx.doi.org/10.2139/ssrn.94043
Kadapakkam, P. R., Kumar, P. C., & Riddick, L. A. (1998). The impact of cash flows and firm size on investment: The international evidence. Journal of Banking & Finance, 22(3), 293-320. https://doi.org/10.1016/S0378-4266(97)00059-9
Lee, C. C., & Wang, C. W. (2021). Firms' cash reserve, financial constraint, and geopolitical risk. Pacific-Basin Finance Journal, 65, 101480. https://doi.org/10.1016/j.pacfin.2020.101480
Lei, J., Qiu, J., Wan, C., & Yu, F. (2021). Credit risk spillovers and cash holdings. Journal of Corporate Finance, 68, 101965. https://doi.org/10.1016/j.jcorpfin.2021.101965
Malmendier, U., & Tate, G. (2005). CEO overconfidence and corporate investment. The Journal of Finance, 60(6), 2661-2700. https://doi.org/10.1111/j.1540-6261.2005.00813.x
Myers, S. C. (1977). Determinants of corporate borrowing. Journal of Financial Economics, 5(2), 147-175. https://doi.org/10.1016/0304-405X(77)90015-0
Nga, D. Q., Dien, P. M., Linh, N. T. C., & Tuoi, N. T. H. (2019). Impact of leverage on firm investment: evidence from GMM approach. In Beyond Traditional Probabilistic Methods in Economics 2 (pp. 282-295). Springer International Publishing. https://doi.org/10.1007/978-3-030-04200-4_22
Nguyen, A. T. L., Van Nguyen, D., & Nguyen, N. H. (2022). The relationship between financial decisions and equity risk. Heliyon, 8(8). https://doi.org/10.1016/j.heliyon.2022.e10036
Nguyen, V. H., Choi, B., & Agbola, F. W. (2020). Corporate social responsibility and debt maturity: Australian evidence. Pacific-Basin Finance Journal, 62, 101374. https://doi.org/10.1016/j.pacfin.2020.101374
Nnadi, M., Surichamorn, V., Jayasekera, R., & Belghitar, Y. (2022). Empirical analysis of debt maturity, cash holdings and firm investment in developing economies. International Journal of Finance & Economics, 27(3), 3345-3372. https://doi.org/10.1002/ijfe.2324
Opler, T., Pinkowitz, L., Stulz, R., & Williamson, R. (1999). The determinants and implications of corporate cash holdings. Journal of Financial Economics, 52(1), 3-46. https://doi.org/10.1016/S0304-405X(99)00003-3
Ozkan, A., & Ozkan, N. (2004). Corporate cash holdings: An empirical investigation of UK companies. Journal of Banking & Finance, 28(9), 2103-2134. https://doi.org/10.1016/j.jbankfin.2003.08.003
Phan, D. T., & Nguyen, H. T. (2020). Factors affecting corporate investment decision: Evidence from Vietnamese economic groups. The Journal of Asian Finance, Economics and Business, 7(11), 177-184. https://doi.org/10.13106/jafeb.2020.vol7.no11.177
Ruiz-Porras, A., & Lopez-Mateo, C. (2011). Corporate governance, market competition and investment decisions in Mexican manufacturing firms. https://mpra.ub.uni-muenchen.de/28452/1/MPRA_paper_28452.pdf
Santoso, H. (2019). The impact of investment decision and funding on financial performance and firm value. Jurnal Ekonomi Bisnis dan Kewirausahaan, 8(2), 103-112. http://dx.doi.org/10.26418/jebik.v8i2.31153
Scherr, F. C., & Hulburt, H. M. (2001). The debt maturity structure of small firms. Financial management, 85-111. https://www.proquest.com/scholarly-journals/debt-maturity-structure-small-firms/docview/208187637/se-2?accountid=26990
Sheu, H. J., & Lee, S. Y. (2012). Excess cash holdings and investment: the moderating roles of financial constraints and managerial entrenchment. Accounting & Finance, 52, 287-310. https://doi.org/10.1111/j.1467-629X.2012.00500.x
Terra, P. R. S. (2011). Determinants of corporate debt maturity in Latin America. European Business Review, 23(1), 45-70. Doi. 10.1108/09555341111097982
Titman, S., Tompaidis, S., & Tsyplakov, S. (2004). Market imperfections, investment flexibility, and default spreads. The Journal of Finance, 59(1), 165-205. https://doi.org/10.1111/j.1540-6261.2005.00813.x
Virlics, A. (2013). Investment decision making and risk. Procedia Economics and Finance, 6, 169-177. https://doi.org/10.1111/10.1016/S2212-5671(13)00129-9
Zaheer, A., & Bell, G. G. (2005). Benefiting from network position: firm capabilities, structural holes, and performance. Strategic Management Journal, 26(9), 809-825. https://doi.org/10.1002/smj.482
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