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
SUMMARY OF PHD THESIS
Major: Finance - Banking
Code: 9 34 02 01
Scientific instructor: Assoc. Prof., PhD. Tran Hoang Ngan
PhD. Vu Van Thuc
HO CHI MINH CITY – 2/2020
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INTRODUCTION
1. RATIONALE
1.1 Research issues
Corporate capital structure and debt maturity have certain
influences on its sustainable development as well as business
performances. It is noted that the improper choice of capital structure
and debt maturity structure that do not match characteristics of the
business sector or individual enterprise features can generally lead to
the firm’s long-term disadvantages.
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.
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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,
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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).