The impact of capital structure on firm value of Vietnamese listed companies - a quantile regression approach

Although there are many studies proving the close relationship between capital structure and firm value, contradicting results show that this relationship depends on research methods or characteristics of businesses. Does the decision on capital structure in low-value firms have different influence compared to high-value firms? This paper overviews literature on the effect of capital structure on firm value, and provides an empirical study on non-financial listed companies on Vietnam’s Stock market in the period from 2011 to 2017. By using quantile regression method based on the panel data from 446 companies with 3122 observations, the results show that leverage has a positive impact on firm value when it is low and a opposite effect when it is high. These findings suggest that low-value firms should raise capital by taking more debt, whereas high-value firms should raise capital by issuing more shares.