FACTORS AFFECTING THE DECISION OF THE CAPITAL STRUCTURE OF THE BUSINESS: A CASE STUDY OF LISTED REAL ESTATE COMPANIES

Abstract

This paper investigates the impact of firms’ characteristics on the leverage ratio
with the sample of listed real estate companies in Vietnam stock market in the
period from 2010 to 2018. The results reveal that short-term leverage is influenced
by profitability, firm size, growth opportunities, potential risks, firm age, and
liquidity, while only risks and liquidity have an impact on long-term leverage. In
addition to the maturity test, the factors affecting the total leverage of firms are
also identified in the roles of firm size, risks, age, and settlement. The major
findings are discussed based on the trade-off theory and the pecking order theory.
Additionally, based on the findings of the reported results, the study also implies
the suitable debt structure to maximize a firm's value.