CẤU TRÚC vốn VÀ cấu TRÚC KỲ HẠN nợ CỦA CÁC DOANH NGHIỆP đầu TƯ XÂY DỰNG, KINH DOANH bất ĐỘNG SẢN TẠI VIỆT NAM tt tiếng anh

MINISTRY OF EDUCATION & TRAINING STATE BANK OF VIETNAMBANKING UNIVERSITY HO CHI MINH CITY PHAM THI VAN TRINH CAPITAL STRUCTURE AND DEBT MATURITY STRUCTURE OF REAL ESTATE CONSTRUCTION

MINISTRY OF EDUCATION & TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY HO CHI MINH CITY

PHAM THI VAN TRINH

CAPITAL STRUCTURE AND DEBT

MATURITY STRUCTURE OF REAL ESTATE CONSTRUCTION INVESTMENT AND

TRADING ENTERPRISES IN VIETNAM

SUMMARY OF PHD THESIS

HO CHI MINH CITY – 2/2020

MINISTRY OF EDUCATION & TRAINING STATE BANK OF VIETNAM

BANKING UNIVERSITY HO CHI MINH CITY

PHAM THI VAN TRINH

CAPITAL STRUCTURE AND DEBT

MATURITY STRUCTURE OF REAL ESTATE CONSTRUCTION INVESTMENT AND

TRADING ENTERPRISES IN VIETNAM

As a typical feature of the business sector, real estate products are special goods with high value and fixed location, all real estate related activities are governed by the legal system of the country In Vietnam, the Land Law that marked the birth of its real estate market was just officially launched in 1993 The fact shows that Vietnam has just got initial steps in the real estate industry It has suffered unstable periods

of development; sometime, it may achieve "overheating" growth then fall into a state of "freezing" At each of the above development stage, real estate businesses commonly face certain obstacles and difficulties

As another feature of real estate industry, real estate businesses require long-term funding to finance real estate projects However, most real estate businesses use short-term liabilities, later resulting in several risks and obstacles for businesses’ performances regarding the pressure

of liquidity and other financial difficulties

In the period from 2008 to 2017, real estate businesses had faced various difficulties under objective impacting factors stemming from the global financial crisis in 2008, as well as subjective ones regarding the decision of capital structure and structure of debt maturity It is noted that the majority of real estate businesses heavily depends on funding - mostly are short-term debts to invest in priority areas Real estate projects require capital in the long run; therefore, many real estate businesses are currently facing large inventories, high financial costs resulting in financial imbalance, reduced profitability and low liquidity

For this reason, it is critical that real estate businesses select an effective capital structure and structure of debt maturity so that they can achieve goals in terms of saving capital costs, taking advantage of financial leverage, improving financial capacity, ensuring liquidity and gaining high profitability when getting unstable signals of the real estate market This research, therefore, mainly addresses the following issues: (i) factors affecting capital structure and structure of debt maturity of real estate enterprises including performances of construction, investment and trading in Vietnam; (ii) the speed adjustment of capital structure and structure of debt maturity of real estate enterprises including performances of construction, investment and trading in Vietnam in order to achieve the target capital structure and target debt maturity structure; (iii) determining the target capital structure threshold and target structure of debt maturity of construction,

investment and trading real estate businesses in Vietnam; (iv) the correlation between capital structure and debt maturity structure of construction investment and trading real estate enterprises in Vietnam, and proposes implications that construction, investment and trading real estate businesses in Vietnam can use to decide proper capital structure and structure of debt maturity reasonably, contributing to improve the efficiency of the financial management and enhance the market value

1.2 Overview of related studies and scientific gaps

Practically, there have been several published studies related to capital structure and structure of debt maturity carried out in different approaches and methods worldwide generally and in Vietnam particularly; therefore, research results differ as the follow:

Firstly, researches on capital structure of enterprises mainly focus

on large-scale enterprises that have been listed on stock exchanges in developed countries such as France, the USA, Germany, Japan, the UK and Switzerland including studies carried out by Rajan & Zingales (1995), Booth & et al (2001), Graham & Harvey (2001), etc while others conducted in some emerging markets: China and India by Chen (2003), Deesomsak & et al (2004), Li (2010), and Ramzi & Tarazi (2013) In Vietnam, amongst studies on factors affecting the capital structure are those of Doan Ngoc Phi Anh (2010), Duong Thi Hong Van (2014) and Vo Thi Quy (2014)

Secondly, it is noted that studies on adjustment speed of capital

structure towards the target capital structure threshold mainly analyze the impact of macro factors on adjustment speed of capital structure towards the target capital structure threshold such as worldwide studies conducted by Drobert & Wanzenried (2006), Cook & Tang (2010), Mukkherjee & Mahakid (2012), Ahmad & Abdullah (2012) In Vietnam, Tran Hung Son (2013) and Le Dat Chi (2013) mainly studies the adjustment speed of dynamic capital structure; whereas Dang Thi Thuy Anh & et al (2014) focuses on adjustment speed of static capital structure Furthermore, Pham Tien Minh & et al (2015) researches on comparing the adjustment speed of static capital structure versus dynamic one, Tran Thi Kim Oanh (2018) carries out a study on the adjustment speed of enterprise capital structure during the global financial crisis in 2008

Thirdly, researches on debt maturity structure of enterprises focus

on verifying and explaining factors affecting the decision to choose debt maturity structure of enterprises, as of Barnea & et al (1980), Brick & Ravid (1985), Flannery (1986), Lewis (1990), Barclay & Smith (1990), Diamond (1991), Stohs & Mauer (1996), and Ooi (1999) Most of these studies have focused on the structure of corporate debt maturities in developed countries Focusing on businesses listed

on the stock exchange in Vietnam, thesis of Nguyen Thanh Nha (2018)

is the only research that has been found

Fourthly, studying on the speed of adjustment of debt maturity

structure towards the target debt maturity structure threshold include research of Leland (1994), Leland & Toft (1996) and Leland (1998), Ozkan (2000), and Antoniou & et al (2006)

Field researches show the existence of research gaps as the followings:

(i) Research gaps on capital structure Previous studies have not

considered all factors, especially institutional ones-in emerging economies due to the fact that institutional factors can influence business capital structure, not to mention that measurement criteria if have not been wisely chosen might lead incorrect research results that

do not truly reflect the business performances In addition, there are a number of works approaching in the direction of determining the target capital structure adjustment speed, namely Antoniou & et al, 2008; Sbeiti, 2010; Nor & et al, 2011; Tongkong & et al, 2013; Jindrichovska

& et al, 2013; Öztekin, 2015; Khanna & et al, 2015 Nevertheless, not many researches with the above approach have been conducted in Vietnam up to now Specially, none of official study is carried out to determine the target capital structure of the real estate industry This is the research gaps of the thesis

(ii) Research gaps on debt maturity structure Domestic and

abroad empirical studies on debt maturity structure still have some shortcomings as those on capital structure According to the

author's statistics, none published paper conducted abroad on the

determination of the target debt maturity structure while in Vietnam, only study of Nguyen Thanh Nha (2018) focusing on factors affecting the structure of debt maturity is found As a matter of fact, there have not been many studies on determining the target debt maturity structure, specially the structure of debt maturity of the real estate industry, implying that debt maturity structure of enterprises is actually quite a new topic, which is still another research gap to be exploited and supplemented for previous studies

(iii) Research gaps on the correlation between capital

structure and debt maturity structure It is recognized that a few

studies on the correlation between capital structure and debt maturity structure have been done worldwide such as Antoniou & et al, 2006; Teruel & Solano, 2007; Cai & et al, 2008; Deesomsak et al, 2009; Correia and et al, 2014; Lemma & Negash, 2012; Mateurs & Terra, 2013; Costa & et al, 2014, but none has been found in Vietnam Therefore, it is critically important to study the correlation between capital structure and debt maturity structure in Vietnam in order to carry out tests based on the signaling theory and to provide empirical evidences on whether negative or positive direction of the correlation between capital structure and debt maturity structure in real estate businesses in Vietnam are revealed

The above research gaps should be certainly fulfilled in further research on capital structure and structure of debt maturity of enterprises in real estate industry Acknowledging that the research

issue is not only theoretically but also practically important, the author

has conducted a thesis entitled “Capital structure and debt maturity

structure of construction investment and trading enterprises in Vietnam”

2 RESEARCH OBJECTIVES AND QUESTIONNAIRES

2.1 Objectives of the thesis

The thesis sets out following specific objectives:

(i) To analyze factors affecting capital structure and structure of

debt maturity of real estate constructioninvestment and trading enterprises listed on Vietnam's stock market

(ii) To determine the adjusting speed to achieve the target capital

structure and debt maturity structure of real estate investment and construction enterprises listed on Vietnam's stock market (iii) To study the correlation between capital structure and debt

maturity structure of real estate investment construction and trading enterprises listed on Vietnam's stock market

(iv) To identify the target capital structure and debt maturity

structure of real estate construction investment enterprises listed on Vietnam's stock market

2.2 Research questionnaires

(1) What are factors influencing capital structure and debt

maturity structure of real estate construction investment and trading enterprises listed on Vietnam's stock market?

(2) What is the exact figure of adjusting speed of target capital

structure and structure of debt maturityof real estate investment construction and trading enterprises listed on Vietnam's stock market?

(3) Does the correlation between capital structure and debt

maturity structure exist?

(4) Do the target capital structure and debt maturity structure

thresholdsexist in listed construction investment and trading enterprises in Vietnam? What is the figures of the target capital structure and debt maturity structurethresholds?

3 RESEARCH SUBJECTIVE AND SCOPE OF THE THESIS

of real estate construction investment and trading enterprises in Vietnam

3.2 Scope of the research

The thesis uses balance sheet data collected from financial statements of 70 real estate construction investment and trading businesses listed on Vietnam's stock market from 2008 to 2017 It is emphasized that these companies had been adequately recording data from 2008 to 2017 (70 x 10 = 700 observations) and they were all in operation during the research period The relevant information is public on websites of Hanoi Stock Exchange (HNX) and Ho Chi Minh City Stock Exchange (HOSE) Relevant Vietnamese macroeconomic data and financial and institutional development sources, the author collected from websites of the World Monetary Fund (IMF), Worldbank and Datastream

4 RESEARCH APPROACHES

By the regression method to regain balance sheet data processed through Stata software version 14.0, the thesis is about to address the abovequestions:

For questions (1), (2) and (3), Sys-GMM model is chosen

For question (4), Hansen's Panel Threshold Regression model (1999) is applied

The qualitative research method specializing expert measures is applied to collect comments from experts so that further implications

can be explained for the results of the thesis Also, methods of content analysis, synthesis, statistics, comparison and interpretation are ultilized thoughout the whole thesis

5 NEW POINTS AND CONTRIBUTIONS OF THE THESIS 5.1 Theoretically

The thesis provides evidences supporting arguments of MM theory, agency cost theory, TOT theory, POT theory, signaling theory, matching theory, and tax-based theory as well

5.2 Practically

Firstly, the research sample focuses on real estate construction

investment and trading industry in Vietnam The fact that the thesis concentrates on a certain industry group greatly contributes to more in-depth and solid conclusions, not mention its specific meanings to the industry Playing an important role in the economy, the real estate industry highly concentrates on legal systems and macro policies which directly or indirectly affect the market, leading to direct or indirect impact on the capital structure as well as the decision of debt maturity of real estate construction investment and trading enterprises

in Vietnam

Secondly, by Sys-GMM method, quantitative research results

provide empirical evidences of which capital structure and structure

of debt maturity of real estate construction investment and trading enterprises in Vietnam are affected by institutional factors, internal factors and specific macro factors as the followings:

Institutional factors and fixed assets play a prominent role in the decision of capital structure and debt maturity structure

Capital structure is positively affected by internal factors including firm size, growth rate, asset structure, and corporate income tax whereas profitability and liquidity have negative effects on capital structure In addition, the study provides evidences that business risk factors and asset maturity have little or negligible impacts on capital structure Also, it is shown that structure of debt maturity is strongly affected by factors of firm size, liquidity, and business risks, but negligibly impacted by profitability, growth opportunity, asset maturity and corporate income tax

Besides, capital structure is negatively affected by macro factors including economic growth and financial development, but positively impacted by macro factors of inflation, structure of interest rate and financial development

Thirdly, the research results reveal evidences of the existence of

capital structure and dynamic structure of debt maturity of real estate construction investment and trading enterprises that adjust capital structure and debt maturity structure towards the target threshold of 24.87% and 25.92% respectively

Additionally, the thesis indicates solid evidences for the existence of positive correlations between capital structure and debt maturity structure of real estate construction investment enterprises

in Vietnam This shows that these businesses need to reach the target

capital structure first, and then adjust debt maturity to achieve the target debt maturity structure threshold

Fourthly, the threshold model of Hansen (1999) shows

evidences of the existence of the target capital structure threshold and debt maturity structure of real estate construction investment and trading enterprises in Vietnam at 69.68% and 57.90% respectively

By data filter, 40% of businesses in the research sample is found exceeding the target capital structure threshold, and 37,14% of those exceeding the structure of debt maturity These figures point out improper utilization of capital and debt maturity of real estate enterprises in general Some businesses have not exploited benefits from debt balance nor debt maturity On that basis, the author proposes some solutions in order to help businesses to achieve the target debt maturity structure and the capital structure threshold

6 STRUCTURE OF THE THESIS

Chapter 1: Literature review

Chapter 2: Theoretical basis and research models

Chapter 3: Research methodology

Chapter 4: Research results and discussions on capital structure and structure of debt maturity of real estate construction investment and trading enterprises in Vietnam

Chapter 5: Conclusions and policy implications

CHAPTER 1:

LITERATURE REVIEW

1.1 AN OVERVIEW OF EMPIRICAL RESEARCH ON

Firstly, corporate capital structure are influenced by micro

factors including researches of Ross (1977); Titman & Wessels (1988); Chen & et al (1997); Graham & Harvey (2001), Chen (2003), Ramzi & Tarazi (2013), Amjad & Bilal (2012), Hunjra &

et al (2014), and Haron (2014)

Secondly, corporate capital structure are impacted by both

micro and macro factors such as macroeconomic characteristics and development of financial markets consisting of studies by Rajan & Jingales (1995); Wald (1999); Booth & et al (2001), Fama & French (2002), Hatzinikolaou & et al (2002), Chen (2003), Saylgan & et al (2006), Delcoure (2007), Fran & Goyal (2007); Jong & et al (2008), Kayo & Kimura (2011), Gungoraydinoglu & Öztekin, (2011), Erel

& et al (2012), Drobetz & et al (2012)

Thirdly, many researches focus on the impacts of

business-specific and industry-business-specific factors on capital structure such as Clayton, 2009; Kayo & Kmura, 2011; Andani & et al, 2012

Fourthly, studies on institutional factors influencing capital

structure are ofProwse (1990), Rajan & Jingales (1995), Kunt & Maksimovic (1996; 1999), Deesomsak & et al (2004), Duan

Demirguc-& et al (2012), Öztekin Demirguc-& Flanery (2012), Nurlayli Demirguc-& et al (2013), and Bernado & et al (2018)

1.1.2.2 Empirical research on factors impacting debt maturity structure

Firstly, researches focusing on micro factors impacting corporate

debt maturity structure include Barnea & et al (1980); Brick & Ravid (1985); Flannery (1986), Ooi (1999); Ozkan (2000); Teruel & Solano (2007); Terra (2011); Mateurs & Terra (2013); Costa & et al (2014), Hussain & et al (2018)

Secondly, researches concentrating on micro and macro factors, institution, law or size of financial market and corporate income tax system, which influences corporate debt maturity structure consist of Demirguc-Kunt & Maksimovic (1999), Antoniou & et al (2006), Cai &

et al (2008), Deesomsak & et al, (2009), Wang & et al (2010), Lemma

& Negash (2012), Fan & et al (2012), Kirch & Terra (2012), Duan & et

al (2012), Lemma & Negash (2012), Correia & et al (2014)

1.1.2 Empirical studies on adjustment speed of capital structure and debt maturity structure

1.1.2.1 Empirical studies on adjustment speed of capital structure

Previous studies show several different points of view on the behaviors of adjusting capital structure towards the target as below:

Research representing the point of view in which businesses from the same industry have different adjustment on the target capital structure include Ozkan (2001); Fama & French (2002); Baker

&Wurgler (2002); Welch (2004), Leary & Robert (2005), Gonzalez & Gonzalez (2008), Haron (2014)

Research indicating the point of view in which the adjusting speed

of the target capital structure is different from industries to industries comprise Banerjee & et al (2004); Stoja & Tucker (2007); Byoun (2008); Wang & et al (2010); Khanna & et al (2015)

Research focusing the point of view in which the adjusting speed

of the capital structure is different from nations to nations consist of Shyam-Sunder & Myers (1999); Fama & French (2002); Faulkender &

et al (2008); Antoniou & et al (2008); Hovakimian & Li (2009); Nor&

(i) Heterogeneity among enterprises in the same industry with speed of adjustment of debt maturity structure (Myers & Majluf, 1984; Myers, 1984; Titman & Wessels, 1988; Flannery & Rangan, 2006; Titman & Tysplakov, 2007; Flannery & Hankin, 2007; Dang, 2011)

(ii) Heterogeneity among industries with speed of adjustment

of debt maturity structure (Barclay & Smith, 1995; Ozkan, 2000; Cai & et al, 2008)

(iii) Heterogeneity among countries with speed of adjustment

of debt maturity structure (Antoniou & et al., 2006; Deesomsak &

et al., 2009; Mateurs & Terra, 2013; Hussain & et al, 2018)

1.1.3 Empirical studies on the target capital structure and debt maturity structure

1.1.3.1 Empirical studies on the target capital structure

Studies determining the existence of the target capital structure

of domestic and foreign enterprises mostly follow two below approaches:

(i) By nation, Cheng & et al (2010), Ahmad & Abdullah (2012); Wang & Zhu (2014) are recorded

(ii) By industry and firm size, Nieh & et al (2008); and Haron (2014) are found

1.1.3.2 Empirical studies on the target debt maturity structure

The author has recorded that the target debt maturity structure

is still ignored not only in foreign countries but also in Vietnam Only a research of Ju & Hui (2006),examining the hypothesis of trade-off theory to determine the optimal capital structure and debt maturity structure of large-scale commercial companies in the US with 1-6 year corporate bonds issuance is conducted

1.1.4 Empirical research on the correlation between capital structure and debt maturity structure

Research on the correlation between capital structure and debt maturity structure in three below directions:

Firstly, capital structure has positive effects on debt maturity

structure

Secondly, capital structure has positive or negative influences

on debt maturity structure

Thirdly, capital structure has little or no impacts on debt

Real estate industry is influenced by industry factors contributing to the decision of real estate corporate capital structure and debt maturity structure as follows:

Firstly, it is noted real estate products have great value, which

is an outstanding characteristics of the industry Therefore, it is a must to identify corporate capital structure and debt maturity structure following business cycles of the real estate industry, which are likely to be longer than commercial and service ones

Secondly, real estate is considered as one of the most

competitive industries It is no doubt that its special products need

a sufficiently large capital in order to launch projects Thus, management experience, reputation in the market, and ability to operate and to penetrate the market are decisive factors for enterprises to compete top positions of the market

Thirdly, the ability to access funding in order to run real estate

businesses is limited The majority of capital is short-term loans from commercial banks

Fourthly, the real estate industry is governed by real estate

institutions The fact that the real estate market is quite young, plus real estate institutions are gradually improving with lots of constant changes and adjustments, is actually an indirect obstacle for businesses to implement capital structure and to decide structure of debt maturity so that corporate value can be increased in the market

1.2.1.2 Characteristics of real estate businesses in Vietnam

Enterprises in real estate industry have different characteristics compared to those in other fields:

Firstly, it is size of the business Large and reputable

enterprises in the market are easier to access to low-cost capital sources and less subject to liquidity pressure They are also able to increase business efficiency better than small and medium-sized enterprises

Secondly, it is type of the enterprise in real estate industry and

business sector that decides real estate corporate capital structure and structure of debt maturity in Vietnam

Thirdly, investment cost of fixed assets is another feature to be

mentioned It is obvious that fixed assets of real estate enterprises are projects, and it certainly requires very huge costs

Fourthly, it is tax incentives They show that corporate income

tax also has a significant impact on capital structure and debt maturity structure of real estate businesses

1.2.2 Current situation of capital structure, debt maturity structure and financial objectives of real estate construction investment and trading enterprises in Vietnam

1.2.2.1 Current situation of capital structure and debt maturity structure of real estate construction investment and trading enterprises in Vietnam

1.2.2.2 Current situation of financial objectives of real estate construction investment and trading enterprises in Vietnam

CHAPTER 2

THEORETICAL FRAMEWORK OF CAPITAL STRUCTURE AND DEBT MATURITY STRUCTURE OF ENTERPRISES

2.1 THEORETICAL FRAMEWORK OF CAPITAL

STRUCTURE AND DEBT MATURITY STRUCTURE OF

ENTERPRISES

2.1.1 Theoretical basis of capital structure

The thesis presents an overview of the applied theories:

- Modilligiani and Miller theory;

- Agency cost theory;

- Trade-off theory (TOT);

- Pecking Order theory (POT)

2.1.2 Theoretical basis of debt maturity structure

The thesis presents an overview of the theories applied in the thesis

- Modilligiani and Miller theory;

- Trade-off theory (TOT);

RESEARCHES ON CAPITAL STRUCTURE AND DEBT MATURITY STRUCTURE

2.2.1 Theoretical review of capital structure and debt maturity structure

2.2.2 Review of Empirical researches on capital structure and debt maturity structure

2.3 MODELS AND PROPOSED RESEARCH HYPOTHESIS

2.3.1 Research Hypothesis

Based on the theoretical framework of capital structure and debt maturity structure, the thesis builds hypotheses to study the capital structure and debt maturity structure of listed real estate construction investment and trading enterprises listed in Vietnam in model 1 (capital structure) and model 2 (debt maturity structure)as follows:

Table 2.2 Review of research hypotheses

Antoniou & et al (2006), Cai & et al (2008), Cook & Tang (2010), Correia &

et al (2014), Deesomsak & et al (2009) Economic

and Francisco (2014), Correia & et al (2014)

& et al (2012), Lemma & Negash (2012), Krich & Terra (2012), Duan &

et al (2012), Alves & Francisco (2015), Bernardo & et al (2018)

Deesomsak & et al (2009), Fan & et al

Mateurs& Terra (2013), Correia & et al (2014)

Business risk

(RISK)

TOT theory;

Agency cost theory;

Signaling theory

Antoniou & et al (2006), Cai & et al (2008), Deesomsak & et al (2009), Lemma &Negash (2012)

Firm’s size

(SIZE)

Agency cost theory

(2012), Correia & et al (2014) Growth

income tax

(TAX)

Modilligiani and Miller theory;

Tax-based theory

Cai & et al (2008), Kirch & Terra (2012), Fan & et al (2012) Mateurs & Terra (2013), Correia & et al (2014) Capital

Note: (+) Positive impact, (-) Negative impact

Source: Author

Table 2.3 Measurement of variables in the models Variales

website (http://www.hnx.vn) and

Ho Chi Minh city Stock

AMR Assets Maturity

Curent assets + Net Fixed Assets

Curent assets + Net Fixed Asset

TAX Corporate income tax Corporate income taxesit

Government bond yield (5-year term)

2.3.2 Proposed research models

2.3.2.1 Models studying on factors impacting capital structure and debt maturity structure; and adjustment speed of capital structure and debt maturity structure of real estate construction investment and trading enterprises in Vietnam

Model 1 studies on factors impacting capital structure and debt maturity structure

The thesis is based on the research model of Ozkan (2001), Fan &

et al (2010), Ramzi &Tarazi (2013), Mateurs & Terra (2013), Nagano (2013), Alves & Francisco (2015) to decide factors impacting capital structure and debt maturity structure; and to estimate capital structure adjustment speed towards the target capital strutureto be compatible

with real estate constructure investment and trading enterprises

of capital structure is based on the adjustment coefficient λ.Therefore,