Determinants of the financing choices of Vietnamese companies

Abstract

This study examines the determinants of financing choices of Vietnamese non-financial firms from
2012 to 2022. Our empirical analysis with multinomial logit regression reveals that size, liquidity, profitability,
interest payments, depreciation ratios and the stock performance have significant impacts on the probability
of financing choices in Vietnamese firms. In particular, we find that increased liquidity would lead to higher
chance of using internal finance, while bigger firms tend to issue shares to meet their financing requirements.
Moreover, improvement in the profitability and stock performance result to higher probability of using internal
finance, whereas higher interest payment ratios is associated with higher probability of issuing bonds in the
subsequent year.