Chapter 15 The determinants of capital structure: Evidence from Vietnam

The Determinants of Capital Structure in the Service Industry: Evidence from United States

“…This study extends the studies of Biger, Nguyen, and Hoang [6] by collecting data from the US service industry. The results can be generalized to service industry.…”

“…Biger, Nguyen, and Hoang (2008) indicate that collateralized assets, income tax, nondebt tax shield, corporate profitability, firm size, and growth opportunities determine capital structure choices of the firm.…”

“…Biger, Nguyen, and Hoang [6] indicate that firm's asset structure affects its leverage in both positive and negative ways. In addition, the existence of agency costs of debt may cause firms to take riskier investment after the issuance of debt to expropriate wealth from the firm's bondholders because the firm equity is effectively a stock option [9,10].…”

“…Biger, Nguyen, and Hoang [6] and Nguyen and Neelakantan [7] have tested variables by collecting data from Vietnamese firms. This study extends the studies of Biger, Nguyen, and Hoang [6] by collecting data from the US service industry.…”

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Abstract:The paper seeks to extend Biger, Nguyen, and Hoang' (2008) findings regarding the determinants of capital structure. Empirical results show that that leverage is negatively related to the firm's profitability.

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