The Impact of Capital Structure on the Business Performance of Listed Companies on the Vietnamese Stock Exchange

This study investigates the impact of capital structure on the financial performance of non-financial firms listed on the Vietnamese stock exchange from 2019 to 2023. Using panel data of 402 firms with a total of 1,990 firm-year observations, the research applies fixed-effects regression with robust standard errors to account for firm-specific heterogeneity and potential heteroskedasticity. Financial performance is measured by return on equity (ROE), while capital structure is represented by the financial leverage ratio (LEV). Control variables include firm size (measured by the logarithm of total assets) and firm age. The empirical findings reveal that leverage has a significant positive impact on ROE, suggesting that firms using debt efficiently can enhance shareholder returns. In contrast, firm size and age do not show statistically significant effects. These results imply that debt, when used appropriately, plays a crucial role in improving firm performance, aligning with agency theory and capital structure theory. The study provides practical implications for financial decision-making among corporate managers in emerging markets like Vietnam.