POLITICAL PATRONAGE AND CORPORATE LEVERAGE: EVIDENCE FROM VIETNAMESE LISTED FIRMS

ANH T. P. HOANG, ANH D. PHAM
2020 Journal of Science and Technology - IUH  
Since the open-door policy of 'Doi Moi' was launched in 1986, Vietnam has made great strides, from among the world's most impoverished nations to a lower middle-income country. During the development process, there is a growing tendency towards the co-operation between the public and private sectors with the emergence of state-owned and state-controlled enterprises. Previous literature have shown that politically patronised firms tend to gain better access to credit markets than others, owing
more » ... either established connections with financial intermediaries or state influence within major banks. This study explores the difference in capital structure between politically patronised and non-connected firms. Applying difference-in-differences approach to a panel dataset of 160 Vietnamese publicly listed companies over the period 2006-2015, empirical results indicate that politically patronised firms tend to hold significantly higher levels of debt than non-connected ones. Besides, taking an exogenous shock, namely the 2008 financial crisis, into consideration, the above results still remain true during the crisis as well as post-crisis period.
doi:10.46242/jst-iuh.v37i01.308 fatcat:mjzcrlxezfewreepeu46gcrwfy