Beruflich Dokumente
Kultur Dokumente
*
Author's contact information: Email: duynguyen.qa@gmail.com
Abtract
Researching impacts of leverage on firm’s investment decision is very important to business. The author
estimates the leverage with factors: firm’s performance (Tobin’s Q, ROA), cash flows (CF), sales growth
(Sale) and liquidity (Liq) on firm’s ivestment decision (I) of Food – Beverage (F&B) industry which are
listed on Vietnam Stock Exchange on period of 2008-2014. The researching method using GMM model
(Generalized method of moments) indicates that leverage has only immediate impacts and has affects on
lag 1 to investment decisions. Besides, the factors of cash flow and sales growth also have impacts on
investment decision. The other factors do not have affects on firm’s ivestment decision of food - beverage
industry..
1
Nguyen Van Duy., Pham Thi Lan Huong & Le Minh Tu. (2015), Impact Of Leverage On Firm’s
Investment Decision Of Food - Beverage Industry, International Conference on Emerging
Challenges: Managing to Success, 1, 325-331
account for 92.23% of net profits of the whole managed. In the era of global competition,
industry [2]. In particular, net profit of VNM companies need to make major investments in
takes account for 72.74%, MSN is the second tangible fixed assets and other intangible assets in
largest (12.95%) and the third is the KDC order to enhance enterprises’ competitiveness.
(6:54%). [3] Studying on how debt (Leverage) Besides, the capital and debt are main resources
and debt maturity structure influences on the for this investment category. [5]
investment decisions of the company is the However, there have been various
fundamental problem in corporate finance [4]. discussions on Leverage and investment decisions
To achieve the growth in performance and of businesses. Accordingly, in perfect competitive
productivity, leverage needs being well environment, the policies including debt ratio has
2
not significant meaning on affecting investment author separates those companies into two groups:
decisions of businesses. Besides, in non-perfect high-growth companies and low-growth
competitive market, the issues of leverage will companies. The research shows that the debt ratio
cause an impact on investment decisions (leverage negatively impacts on investment decision of low-
can cause underinvestment or overinvestment. [6] growth firms (the bigger the debt ratio is, the less
There have be many researchers, who make the investment is) while this trend becomes a
studies with different approaching methods, also positive factor in promoting investment in high-
give various oppinions. If debt matures after the growth companies. These high-growth companies
expiration of the firm's investment option, it seems to invest more when the debt ratio is bigger
reduces the incentives of the shareholder- (financial leverage has a positive impact). [5]
management coalition in control of the firm to Studies of Firth, Lin and Wong are done in
invest in positive net-present-value investment China market also indicates negative impacts of
projects since the benefits accrue, at least partially, debt on investment decisions for firms listed on
to the bondholders rather than accruing fully to the Shanghai Stock Exchange or the Shenzhen
the shareholders. [7] Stock Exchange in China from 1991 - 2004.
According to Jensen, the assets of large [9].The other study results also give the same
companies will create investment opportunities conclusions as Firth, Lin and Wong’s. The
which will bring better value (investments in researches of Yuan and Motohashi also point out
projects with positive net present value). In case if reverse relationship existing between financial
the debt ratio occupies a large proportion in the leverage and investment decisions [10]. Or even
capital structure of the company, it will push as the most recent research did by Naeemullah
managers to make investment decisions by using Khan also refer the opposite relationship between
debt as the fund (possibly, this debt is being used Leverage and investment decisions of companies
in the project with a negative NPV, or causing listed in Pakistani. [11]
damage to shareholders and overinvestment is In Vietnam market, at present, there are
increasing burden of debt). Therefore, it shows studies by Nguyen Thi Ngoc Trang and Trang
clearly that the debt ratio had a negative impact on Thuy Quyen who research on relationship
the value of the company. [8] between financial leverage and investment
There are many researchers who study on decisions of the public companies listed on
impacts of financial leverage on the investment Vietnam's stock exchanges during 2009 - 2011.
decisions of the business all over the world. the authors values financial leverage affects on
Among them, Aivazian is the typical author who investment decisions at the significant level of
gave an important report by doing research on US 10% [12]. However, because the time factor used
financial company on Compustat in the period in research is quite short (only 3 years) and
1982 to 2002. The results showed that long-term research methods do not have appropriate testing
debt ratio has reduced the impact of investment in (the authors used Pooled effect, Fixed effect and
companies with high growth. Nevertheless, random effect model), research results do not
leverage factor has not significant meaning in achieve high reliability.
affecting investment decisions of lower growth Although there have been studies on impact
enterprises. [4] of financial leverage on investment decisions, no
An experimental study in the Republic of studies have been made for food and beverage
Mauritius Odit & Chitoo shows that Leverage has industry. In Vietnam market, due to limitations of
both positive and negative effects on investment studies by Trang and Quyen, a study with
decisions of twenty-seven companies listed on the expanding the number of researching year and
exchange Mauritius (SEM) 1990 - 2004. The more-closely research method is required to be
conducted. Therefore, the authors conducted a
study "Impact of Investment Firms Levrage on
decission of Food - Bererage Companies" in the opportunity.
period of 2008-2014.
LEVi, t-1: Variable Leverage represents for
leverage at time t-1.
2. RESEARCH METHOD SALEi, t-1: represents for growing in sales.