THEORETICAL FRAMEWORK OF CAPITAL STRUCTURE THRESHOLD AND THE IMPACT MODEL OF CAPITAL STRUCTURE THRESHOLD ON THE FIRM VALUE OF LISTED COMPANIES IN VIETNAM

This study focuses on establishing the theoretical foundation for the concept of capital structure thresholds. By synthesizing key financial theories and prior empirical studies, the paper explains the existence of threshold effects in the relationship between capital structure and firm value. It argues that the impact of financial leverage on firm value may vary across different levels of debt. At low levels of leverage, the effect may be positive due to the tax shield benefits; however, beyond a certain threshold, rising financial costs and bankruptcy risks may outweigh the benefits, thereby reducing firm value. The core of the study presents the threshold regression model developed by Hansen (1999), detailing the procedures for estimating the threshold value, conducting statistical inference, and extending the model to multiple thresholds. Capital structure serves as the primary threshold variable. The study proposes applying this model to listed firms in Vietnam, offering a direction for future empirical research to test the existence of such thresholds and identify the optimal level of capital structure for Vietnamese firms.