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DETERMINANTS OF CAPITAL STRUCTURE OF LISTED COMPANIES IN THE

PHARMACEUTICAL SECTOR: EVIDENCE FROM VIETNAM

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 ICECH2020 - International Conference on Emerging Challenges:
Contemporary Issues in Innovation and Management

DETERMINANTS OF CAPITAL STRUCTURE OF LISTED COMPANIES IN

THE PHARMACEUTICAL SECTOR: EVIDENCE FROM VIETNAM

Nguyen Van Dinh1, Nguyễn Thị Kim Oanh 1, Bui Thi Minh Huyen2
1
Vietnam National University, Hanoi - International School
2
Vietnam National University, Hanoi - Vietnam Japan University
*
Corresponding author: oanhntk@[Link]

Abstract

This study investigates factors associated with the capital structure of pharmaceutical companies listed on Vietnam stock
exchanges using secondary data from financial statements, annual reports, and management reports published from
2010 to 2019. We focus on firm characteristics (profitability, growth opportunity, tangible assets, liquidity, firm size and
firm age) and corporate governance (pluralist executives). We find that profitability, tangible assets, and liquidity have
negative correlations with debt ratio. Firm size, firm age and pluralist executives are negatively associated with debt
ratio, but not statistically significant. In contrast, growth opportunities have a positive relationship with capital
structure. The findings bring insights into capital structure of listed pharmaceutical firms in Vietnam, which would useful
for investors who are interested in pharmaceutical firms listed in Vietnam.

Keywords: Capital structure, debt ratio, leverage, firm age, pluralist executives, pharmaceutical firms

still a question for researchers to continue looking for

1. INTRODUCTION
answers. In Vietnam, Le and Do (2017) point out that
despite the abundant theoretical and empirical literature
Capital structure refers to a combination of debt and on capital structure, the shortage of research in the
equity that the firms use to finance its operations (Ross, Vietnamese context is obvious. Therefore, it is
Westerfield and Jordan, 2013; Brealey, Myers and Allen, important to investigate the factors that influence the
2010). The capital structure can be measured by debt capital structure of Vietnamese companies.
ratio, total debt over total assets (Saeed et al., 2014;
Chen, 2004; Ahmed Sheikh and Wang, 2011). It has
We focus on pharmaceutical firms listed in the Vietnam
been a puzzle for the managers to choose the right
stock market because of several reasons. First,
combination of equity and debt to attract investors and
pharmaceutical industry has experienced inevitable
creditors. A right capital structure (equity-debt mix) can
development. According to Business Monitor
reduce the cost of capital and firms aim to reduce the
International Research, in 2018, Vietnam's
cost of capital to create the shareholder value” (Kaur
pharmaceutical market size reached about 5.9 billion
and Narang, 2010).
USD, up 11.5% compared to the previous year. Vietnam
has become Southeast Asia's second-largest
In recent years, the theory of modern capital structure pharmaceutical market and is among the 17 fastest
has only been studied in developed countries but has not growing countries in the world. Vietnam has completed
been paid much attention in developing countries the "golden population" phase from 2016, beginning its
(Mouamer, 2011). Črnigoj and Mramor (2009) suggest aging population from 2017. According to the
that differences in the capital structure of companies can Department of Population and Family Planning, Ministry
be explained by modern capital structure theory for of Health, by 2050, 21% of Vietnam's population has
developed countries, but for developing countries, it is been over 65 years old, leading to high consumer demand
for drugs over the next 30 years when people’s income
increase. Although growing rapidly, Vietnam's
pharmaceutical production capacity currently meets only
53% of the domestic pharmaceutical demand, the rest is

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 ICECH2020 - International Conference on Emerging Challenges:
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through imports. In 2018, Vietnam's pharmaceutical company with a high growth opportunity has high
imports nearly 2.8 billion USD; this level continues to demand to borrow when the retained earnings are not
increase by 10% in 2019. Vietnam is also highly enough to meet the firm's demand. In contrast, high
dependent on imported pharmaceutical raw materials, profitability will allow companies to have more
mainly from China with more than 60% of demand. conditions to retain more profit, so they will use less
debt.
Second, prior empirical studies on determinants of
capital structure used a different set of independent and The agency theory was completed by Jensen and
dependent variables show contradictory results Vo Meckling (1976) and it explains the relationship
(2017). Even though research on factors affecting the between principal and agent. This theory shows the
capital structure of pharmaceutical listed companies has growth rate is negatively correlated with debt because
been done in some developing countries (Saeed et al, shareholders often do not want to share benefits with
2014; Imtiaz et al., 2016), there is no study conducted creditors when the firm grows well. Agency theory
on the capital structure of the pharmaceutical industry in suggest that firm size has a positive impact on the debt.
Vietnam in recent years. Therefore, this study will Large companies choose to borrow more than small
investigate factors impacting capital structure of ones because the terms in the loan agreement will
pharmaceutical listed firms in the last 10 years, from control managers’ behaviors, which is rooted in
2010 to 2019. conflicts between shareholders and managers.

2. LITERATRURE REVIEW AND HYPOTHESES The conflicts between ownership and management lead
to a link between corporate governance and capital
2.1 Theoretical background structure of the firms through the agency cost (Nazir,
Aslam and Nawaz, 2012; Berger, Ofek and Yermack,
1997; Friend and Lang, 1988; Wen, Rwegasira and
Modigliani and Miller (1958) introduced the first theory
Bilderbeek, 2002). If CEO is the chairman of the board
of capital structure laying foundation for later theories.
referred as pluralist executives or CEO duality, he will
That is, all the way of combinations of equity and
liabilities are the same in a perfectly competitive market increase the power of the CEO to help make decisions
with no tax. According to Bradley, Jarrell and Kim quickly and ensure decisions are implemented. However,
this duality causes management disfunction since the
(1984) “At any financial option, whether using equity or
CEO will act to achieve his goals, not the shareholders'.
choosing short-term or long-term debt, the value of the
As such, managers may not always accept leverage
business is unchanged”. Modigliani and Miller (1963)
choices that are maximizing value for shareholders.
suggest effect of corporate tax: the value of the levered
company is higher than value of unlevered company Instead, managers may tend to select the leverage
because of benefits from the tax shield. degree that maximizes their own benefits.

The trade-off theory explained why companies are often

financed partly by debt and partly by equity. Despite 2.2 Research hypotheses
existence of a debt tax-shield benefit, companies cannot
Profitability and Debt ratio: the pecking order theorists
fully finance a loan because the use of debt financing
suggest that profitability is an essential determinant of
generates more costs, especially bankruptcy costs
capital structure because it shows how much earning the
including both direct and indirect costs. The trade-off
company retains to keep it going (Titman and Wessels,
theory assumes that the target debt ratio can be different 1988). Enterprises with high profit prefer internal
among firms. Companies that have secure tangible funding to external debt. Internal funding from retained
assets and high profitability have higher debt ratios and
earnings will be used first which is followed by
vice versa. Companies with large tangible fixed assets
borrowed debt and issued stock. The firms are more
will be able to pay better; firms will use more debt to
likely to use less debt when having high profitability
take advantage of the tax shield. The higher the (e.g. Ahmed Sheikh and Wang, 2011; Saeed et al., 2014;
profitability is, the fewer bankruptcy costs are, therefore; Titman and Wessels, 1988; Wald, 1999; Booth et al.,
companies will tend to use more debt to take advantage
2001; Viviani, 2008; De Jong, Kabir and Nguyen, 2008;
of the tax shield.
Serrasqueiro and Roga˜o, 2009; Chen, 2004; Tong and
Green, 2005; Huang and Song, 2006). However, as
The pecking order theory indicated that there is a implied in the trade-off theory, companies with high
priority in the use of funding sources. The investment profitability should use more debt because of the tax
will be financed first by internal capital (mainly retained depreciation and lower expected bankruptcy costs
earnings), followed by new debt financing and finally (Frank and Goyal, 2003; Fama and French, 2002). In
new equity issuance. The order of using funding sources Vietnam, prior studies proved that there is a negative
indicates the negative relationship between profit and between profitability and capital structure (Pham and
debt. This theory shows that growth rates and Nguyen, 2015; Vo, 2017). Therefore, relationship
profitability have effects on capital structure. A between profitability and debt ratio is stated as follows:

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 ICECH2020 - International Conference on Emerging Challenges:
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H1: Profitability is negatively associated with debt ratio lending to larger firms because such firms are seen to
have lower levels of risks (Rajan and Zingales, 1995).
Growth opportunity and Debt ratio: Based on the This opinion was supported by a lot of empirical studies
trade-off theory, the firms which have larger growth in the world including Abor (2007); Ahmed Sheikh and
opportunities usually maintain a lower debt ratio Wang (2011); Saeed et al. (2014). In Vietnam, the
because the risk level may be high with growth-oriented positive relationship between the size of firms and
investment. Besides, firms with growth opportunities capital structure was also proved in the research of Tran
like holding intangible assets which cannot be collateral, and Ramachandran (2006). Based on the trade-off
so they tend to use less debt. Therefore, according to the theory and the results of previous empirical research, we
trade-off theory, there is a negative relationship between hypothesize that:
growth opportunities and capital structure (Myers, 1984;
Deesomsak, Paudyal and Pescetto, 2004). Some H3: The size of firms is positively associated with debt
researches supported for this opinion are Saeed et al. ratio
(2014); Imtiaz, Mahmud and Mallik (2016). Similarly,
agency theorists point out that the high growth rate also Tangible assets and Debt ratio: As stated by Myers
means positive business results so the shareholders do (1984), there is a link between tangible assets and
not want to share this advantage with the creditors, and financial leverage due to the fact that companies with
then they will use less debt (Zou and Xiao, 2006; Eriotis lots of collaterals will have a low rate in the matter of
et al., 2007). asymmetric information. Frank and Goyal (2009)
claimed that it is evident that if the company has
In contrast, the pecking order theory suggest that mortgage loans, the borrower's risk associated with the
companies with good growth opportunities have more cost of the loan will also decrease. This argument is also
demands for borrowing capital, especially when supported by empirical studies (e.g. Huang and Song,
retained earnings are not enough for operating. In this 2006; Titman and Wessels, 1988). Based on trade-off
situation, firms will have the priority to choose theory, tangible assets have a positive relationship with
borrowed capital to increase the debt ratio because the capital structure because enterprises which have the
cost of flotation in selling stock is more than the cost of larger number of tangible assets usually receive
issuing debt. The empirical studies supported for this liabilities with the quite more convenient condition than
opinion include Vo (2017); Pham and Nguyen (2015); the ones with the smaller number of tangible assets due
Tran and Ramachandran (2006). The relationship to the fact that it looks like a positive sign for creditors.
between growth opportunity and debt ratio is stated as Tangible assets can have an influence on the decision of
follows: a company to borrow money because tangible assets are
more valuable than intangible assets in case the firm is
H2: Growth opportunity is positively associated with bankrupt. Besides, the level of risk will decrease when
debt ratio the company provides tangible assets to mortgage and
creditors can require to sell these assets in case the
Firm size and Debt ratio: According to pecking-order company cannot pay. Therefore, tangible assets are
theory, larger firms will have fewer problems related to good-mortgaged assets for the debt. Empirical studies
information asymmetric, they will tend to use equity to supported this opinion including Saeed et al. (2014);
finance firm activities. It means that firm size has a Frank and Goyal (2009); Titman and Wessels (1988).
negative impact on capital structure. Chen (2004) also
showed the negative relationship between firm size and Agency theory, in contrast, suggest a negative
long-term leverage ratio. However, agency theorists relationship between tangible assets and debt ratio.
point out that due to the conflict between shareholders Firms with fewer collateral assets can use more debt to
and managers, larger companies choose to borrow more prevent managers from the optimal levels of perquisites
because the terms in the loan agreement will control the (e.g. Ahmed Sheikh and Wang, 2011; Booth et al., 2001;
behavior of the manager (e.g. Deesomsak et al., 2004; Titman and Wessels, 1988; Sayilgan et al., 2006). In
Eriotis et al., 2007; Serrasqueiro and Roga˜o, 2009). Vietnam, a study from Tran and Ramachandran (2006)
also found out this negative relationship. Therefore,
As implied in trade-off theory, large-sized companies based on the previous empirical studies as well as the
can borrow more capital than small-sized enterprises. trade-off theory, we hypothesize that:
Small-sized firms have to bear a higher cost than the
large-sized ones to have external capital (Titman and H4: Tangible assets is positively associated with debt
Wessels, 1988). Therefore, the large firms are more ratio.
convenient than the small ones to enter the capital
market which shows that there is a positive relationship Liquidity and Debt ratio: Liquidity ratio may have
between debt ratio and the size of firms. Another reason mixed effect to leverage of the firm (Vo, 2017). Based
is that bigger firms are more diversified and thus they on the trade-off theory, enterprises with high liquidity
will have a lower variance of profit and can get tax usually maintain a higher debt ratio because they can
benefits from debt, making them able to endure a higher ensure obligations of a contract on time, which shows a
cost of debt than smaller firms. Besides, lenders prefer positive relationship between liquidity and capital

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 ICECH2020 - International Conference on Emerging Challenges:
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structure. However, as implied in the pecking order relationship between pluralist executives and the use of
theory, enterprises usually have a priority to use internal debt (e.g. Abor, 2007; Pindado and De La Torre, 2011).
funding from retained earnings rather than external Other studies found no significant impact of CEO
funding. Therefore, if firms are able to make higher duality on capital structure (Jaradat, 2015; Saeed et al.,
retained earnings, their demand for external funding will 2014). In Vietnam pharmaceutical industry context,
not be important when their assets are enough to be used recently, many domestic and foreign investors have
for investing. This shows that there is a negative invested in Vietnamese pharmaceutical companies, so to
relationship between liquidity and debt ratio. The fund their activities, companies will use capital from
empirical studies proved this opinion including new investors and shareholders instead of using debt.
Deesomsak et al. (2004); Ahmed Sheikh and Wang Moreover, according to agency theory, shareholders do
(2011); Saeed et al. (2014). Therefore, based on the not want to share benefits with creditors, the CEO as a
pecking order theory and some empirical studies, we chairman will use less debt to avoid the risk of
hypothesize that: bankruptcy, loss of benefits, and loss of their control. we
hypothesize that:
H5: Liquidity is negatively associated with debt ratio
H7: Pluralist executive is negatively associated with
Firm age and Debt ratio: Firm age refers to the number debt ratio
of years from the firm’s initial public offering of
common stock until now (Oliner and Rudebusch, 1992). 3. RESEARCH MODEL, MESUREMENT AND
Based on the trade-off theory, the profits of younger DATA COLLECTION
firms may be small to pay for the cost of debt and may
not be useful to utilize the tax benefits of debt, it means
that they gave the research result that firm age has a 3.1 Research model
positive relationship with the leverage ratio. Chen and
Strange (2005) also supported this opinion. Besides, This study employs linear regression model to test the
Diamond (1989) also pointed out that the older listed hypotheses between capital structure and its
companies have a reputation and debt repaying history determinants (Figure 3.1). The debt ratio is dependent
will be easier to finance their company at a lower cost. variable. The independent variables consist of
In contrast, the pecking order theory showed that older Profitability, Growth opportunity, Firm size, Tangible
companies will use less debt than younger companies assets, Liquidity, Firm age, and Pluralist Executives.
because these older companies have more time to attract,
collect and accumulate funds. To support pecking order
theory, researches from Hall et al. (2000); Kieschnick
and Moussawi (2018) found out that firm age has a
negative relationship with the leverage ratio. According
to pecking order theory and previous researches, I
hypothesize that:

H6: Firm age is negatively associated with debt ratio

Figure 3.1: Research model
Pluralist Executive and Debt ratio: Pluralist executive
exists when a firm’s chief executive also serves as This model is expressed in the equation below:
Chairman of the board of directors (Boyd, 1995).
Agency theorists point out that the goal of the TD = α + 𝛽1𝑃𝑅𝑂𝐹𝑡 + 𝛽2𝐺𝑅𝑂𝑊𝑡 + 𝛽3𝑆𝐼𝑍𝐸𝑡 + 𝛽4𝑇𝐴𝑁𝐺𝑡
shareholders is to maximize the value of their business, + 𝛽5𝐿𝐼𝑄𝑡 + 𝛽6𝐴𝐺𝐸𝑡 + 𝛽7𝑃𝐿𝑈𝑡+ε
that is, maximize the market value of their equity.
Managers are aiming for short-term goals with the Where TD is debt ratio, PROF is profitability, GROW is
ability to increase profits, can bring quick results, help growth opportunity, SIZE is firm size, TANG is
them increase their salaries, bonuses, and reputation. Tangible assets, LIQ is liquidity, AGE is firm age, PLU
When owners and managers are independent, if the is pluralist executives.
owners lose their control, the managers will operate the
companies to make them profitable which may harm the
benefit of the owners. On the other hand, when the CEO 3.2 Variable measurements
is also a chairman, they can impact directly the
financing decisions of the firms, they usually prefer Variable measurements are estimated using book value
using less debt to avoid bankruptcy and loss their and were adopted from prior studies (Table 3.1).
control. For Fosberg (2004) there is a negative
relationship between pluralist executives and leverage
ratio.

In contrast, some studies found out that the positive

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 ICECH2020 - International Conference on Emerging Challenges:
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Table 3.1: Variables measurement
2018 48.69% 3.49% 47.83%

2017 52.03% 1.79% 46.18%

2016 50.70% 1.42% 47.87%

2015 48.57% 2.85% 48.58%

2014 51.36% 2.92% 45.72%

2013 51.88% 4.14% 43.97%

2012 54.49% 2.93% 42.58%

2011 53.43% 4.12% 42.45%

2010 49.43% 3.22% 47.34%

Average 50.64% 3.00% 46.36%

Where: CL is Current Liabilities; LD is Long-term
Debts; TE is Total Equities; TC is Total Capital = CL +
LD + TE.
Table 4.2: Descriptive statistics of independent
variables
Std.
Variables Obs Mean Min Max
Dev
TD 200 0.42 0.21 0.09 0.097
PROF 200 0.13 0.08 -0.35 0.43
GROW 200 0.25 1.39 -0.21 19.33
SIZE 200 13.11 1.3 9.82 16.09
3.3 Data collection TANG 200 0.26 0.17 0.05 0.74
LIQ 200 2.35 1.47 0.87 13.33
There are 20 pharmaceutical companies listed on AGE 200 4.85 3.68 0 13
Vietnam's stock market, of which 9 pharmaceutical PLU 200 0.38 0.49 0 1
companies are listed on the Hanoi Stock Exchange
(HNX) and 11 pharmaceutical companies are listed on 4.2 Testing the model
the Ho Chi Minh City Stock Exchange (HOSE). The
data were collected from financial statements of 20 Figure 4.1 shows the original regression model.
listed pharmaceutical companies from 2010 to 2019. R-squared is equal to 0.637594, which means that
Then, the authors also used Excel to intergrade data and 63.7594% of the volatility of total debt is due to the
calculate the necessary ratios. EViews software was independent variables including profitability, growth
used to analyze the data. rate, firm size, tangible assets, liquidity, firm age, and
plural executives. In other words, this regression model
4. FINDINGS AND DISCUSSIONS explains 63.7594% of the capital structure, the rest is
due to errors and other factors. In addition, the
4.1 Descriptive statistics regressors have impact on the regressand [F = 46.96551
>𝐹𝛼 (k-1,n-k) = 𝐹0.05 (7,192) = 2.0096; Prob (F-statistic)
= 0.0000 < 0.05] (Gujarati and Porter, 2012).
Table 4.1 shows that main funding sources for business
activities are short-term debt (current liabilities) and
equity. The accounts payable accounts for the largest
proportion. Long-term debt accounts for only a very
small proportion of the total funds of the business. Table
4.2 presents descriptive statistics of all variables

Table 4.1: Capital structures of pharmaceutical firms

Year
CL/TC LD/TC TE/TC

2019 45.84% 3.06% 51.09%

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 ICECH2020 - International Conference on Emerging Challenges:
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Figure 4.3: Regression model without “SIZE” variable

Figure 4.1: Original regression model

Correlation between independent variables were

examined. As shown in Figure 4.2, TANG and SIZE
have the strongest correlation with each other (the
absolute value of the correlation coefficient is 0.616202.
Therefore, the regression model without one of these
two variables was tested.

Figure 4.4: Regression model without “TANG”

variable

Multicollinearity was examined and the result indicates

no multicollinearity because all VIF values range from
Figure 4.2: Correlation matrix of research variables 1.163686 to 1.716872 which are smaller than 10
(Gujarati and Porter, 2012). Breusch-Godfrey Test and
White test are used to test autocorrelation and
When removing one of the two variables from the heteroskedasticity, respectively (White, 1980). The
model, the results of the remaining variables remain results show that there is no serial correlation in the
unchanged. Therefore, it can be concluded that the regression model, but the regression model has
strong correlation between the two variables TANG and heteroskedasticity. Therefore, the standard errors model
SIZE does not affect the results of the regression model was used to overcome the heteroskedasticity of the
(Figure 4.3 and Figure 4.4). model (White, 1980), as shown in Figure 4.5.

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 ICECH2020 - International Conference on Emerging Challenges:
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meaning because P-value = 0.7281 > 0.05. This result is
suitable with the pecking order theory suggests that
asymmetric information in large-sized companies is less
than the small – sized ones because the big companies
usually have the tendency to provide information for
external investors. Therefore, they usually prefer using
equity to debt (Titman and Wessel, 1988; Chen 2004).

For H4, the beta coefficient of tangible assets is

negative and statistically significant impact. Therefore,
H4 is not supported. Nowadays, the pharmaceutical
companies in Vietnam have a higher import percentage
than export one which shows that the production
technology is low and pharmaceutical companies invest
less tangible fixed assets like machines. They mainly
invest in the inventories, however, due to the fact that
account receivables have still not received, so the firms
still have to borrow to finance these activities. In
addition, when using debt, the company will avoid
maximizing profit of managers. This result is consistent
with the research results of Booth et al. (2001); Sayilgan
et al. (2006); Tran and Ramachandran (2006); Ahmed
Sheikh and Wang (2011); Imtiaz, Mahmud and Mallik
(2016).
Figure 4.5: None-Heteroskedasticity regression model
H5 is confirmed: the coefficient of the liquidity ratio
The regression model is written as follow: (LIQ) is negative and statistically significant. This
correlation supports the predictions of pecking order
TD = 0.910531 – 0.830972*PROF + 0.037339*GROW theory that when looking for capital, firms usually do a
– 0.002988*SIZE – 0.352823*TANG – 0.097595*LIQ favor of internal funding by retained earnings rather
– 0.002494*AGE – 0.033173*PLU + ε than using external funding. This result is supported by
the study results of Saeedi and Mahmoodi (2011), Saeed
Figure 4.5 shows findings of hypothesis testing. H1 is et al. (2014).
confirmed: the coefficient β of of profitability (PROF) is
negative and statistically significant impact. This Regarding H6, the coefficient of the firm age (AGE) in
negative relationship can be explained by the pecking the regression result is negative effect on debt ratio. The
order theory. If a company has high profit, it will use the pecking order theory supports this result. Because this
internal source of funding like retained earnings rather theory points out that older companies will use less debt
than borrowings from external sources. This result is because these companies have more time and more
consistent with prior studies (e.g. Titman and Wessel, opportunities to get and collect funds from investors.
1988; Booth et al.,2001; Sayilgan et al., 2006; Tran and Besides, this finding is suitable with the research
Ramachandran, 2006; Ahmed Sheikh and Wang, 2011; findings of Hall et al. (2000); Kieschnick and Moussawi
Saeed et al., 2014; Pham and Nguyen, 2015). (2018). However, the firm age does not have the statistic
meaning in this regression model because P-value =
H2 is confirmed: the coefficient β of the growth 0.3639 > 0.05. Therefore, H6 is rejected.
opportunity is positive and statistically significant.
Although this correlation is contradictory with the For H7, the coefficient β of the pluralist executives
predictions of the trade-off theory, it supports the (PLU) in the regression result is negative associated
pecking order theory explaining that the growing with debt ratio. This result is consistent with research
companies require more capital but they do not have results from Fosberg (2004). The meaning of this
enough retained earning so the companies must negative relationship is when the CEO is also a
prioritize funding from debt rather than equity. The chairman in the pharmaceutical industry in Vietnam,
results of this study are consistent with the results of the they will prefer using lower debts to finance firm
study of Sayilgan et al. (2006); Tran and Ramachandran activities to avoid the risk of bankruptcy and loss of
(2006); Pham and Nguyen (2015); Vo (2017). controls. In addition, nowadays, with the increasing
trend of investment in Vietnam's pharmaceutical
H3 is rejected: the beta coefficient of the size of the industry, according to pecking-order theory, pluralist
firms (SIZE) is negative associated with total debt. executives can use financial resources from the
However, this relationship does not have statistical company's shareholders to finance the company's
operations to avoid diluting power, preserving their

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 ICECH2020 - International Conference on Emerging Challenges:
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control. However, because P-value = 0.1721 > 0.05 so limitation of data collection and processing is the
the plural executives do not have the statistical meaning estimation of financial data generated entirely from
in this regression model. Therefore, H7 is not supported. financial statements of companies which means that
asset value or debts are calculated by book value
5. CONCLUSIONS, IMPLICATIONS AND without considering their market value. This study has
LIMITATIONS limitations but may suggest rooms for further researches
in this area. The results of the study can be improved by
adding new explanatory variables or expanding the
5.1 Conclusions
research time period.
This study investigates the determinants of the capital
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