Overview of Research Status Related to Thesis Topic

Factors affecting the capital structure of enterprises in different industries, fields, and at different stages. Each study is a piece of the puzzle that helps to perfect the picture of the capital structure of Vietnamese enterprises.

During the process of building and renovating the country's appearance, the construction materials industry plays a pivotal role, determining the quality, cost and construction time of construction works. The cost of raw materials accounts for the majority of the total construction cost: 75% - 80% for civil and industrial works; 70% -75% for traffic works; 50 - 55% for irrigation works. The development of the construction industry always goes hand in hand with the development of the construction materials industry. The industry also makes significant contributions to the economy, the value of construction materials output often accounts for 7% - 8% of Vietnam's GDP. The construction materials industry receives attention and incentives from the State, and has become a key industry of the Vietnamese economy.

Major construction materials products such as steel, cement, construction glass, sanitary ceramics, tiles, bricks, etc. have undergone remarkable changes. From a shortage of supply and having to import, Vietnam has become a leading exporter of some types of construction materials in the region. Besides these results, our country's construction materials industry still has many shortcomings and limitations in production technology. Many factories have outdated technology and techniques; consume a lot of energy, raw materials, and supplies; have low labor productivity; pollute the ecological environment; have high production costs; have ineffective production and business activities; and have limited competitiveness. At the same time, the situation of massive investment following trends, not complying with planning, not paying attention to supply and demand, not fully taking into account resources, transportation conditions, technical infrastructure, and social infrastructure causes waste of investment capital and damage to the resources of enterprises and society. Research and development activities to innovate products and production technology are little paid attention by enterprises. Environmental pollution and waste treatment in the production of construction materials are not of concern to enterprises.

The 2008 global economic crisis had significant impacts on the Vietnamese economy as well as construction materials enterprises. During the period 2009-2015, a series of enterprises in the industry had declining profits and sustained losses; were not competitive enough, leading to closure, production stoppage or limited production; and mergers and restructuring. Specifically, the debt ratio of cement enterprises increased from 57.96% (2009) to 70.4% (2014); the proportion of regular capital sources decreased from 69.02% (2009) to 57.84% (2014), showing the financial imbalance in the capital mobilization policy of these enterprises. The main reason is that construction materials enterprises lack a long-term capital mobilization strategy. Capital mobilization activities of enterprises are still subjective, heavily response-oriented and unsustainable. After a period of massive investment, NY enterprises in the industry

Construction materials have a very high debt ratio, a financially unsafe financing model, a large interest burden, and a high risk of bankruptcy.

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On August 18, 2020, the Prime Minister issued Decision 1266/QD-TTg approving the strategy for developing Vietnam's construction materials for the 2021-2030 period, with a vision to 2050, effective from January 1, 2021. This Decision highlights the viewpoint of " developing the construction materials industry effectively and sustainably, basically meeting domestic demand, gradually increasing exports, contributing to promoting socio-economic growth and development ", with special attention to " efficient use of resources, thoroughly saving energy, raw materials, and fuel "; " allocating the network of construction materials production facilities nationwide in accordance with the natural and social conditions of each region ". After Decision 1266/QD-TTg was issued and put into effect, localities have successively issued decisions on planning for the development of construction materials in the locality. In the context of a sharp increase in public investment in the 2021-2025 period, with nearly 2.9 million billion VND, the demand for construction materials to implement public investment projects is very large. This requires construction materials enterprises to have appropriate and effective capital mobilization strategies and policies to ensure sustainable operations for the entire industry.

Therefore, applying the theories of CCNV to identify and evaluate; from there, providing some solutions to improve the capital structure for enterprises in the construction materials industry is an urgent requirement in both theory and practice. Based on this requirement, the author has chosen the topic "Capital structure of listed enterprises in the construction materials industry in Vietnam" as the research topic in his doctoral thesis.

2. Research objectives of the thesis

2.1. General research objectives

The general research objective of the thesis is to clarify the capital structure of listed enterprises in the industry in Vietnam; from there, provide assessments of capital structure and propose solutions to improve capital structure for listed enterprises in the construction materials industry in Vietnam.

2.2. Specific research tasks

To achieve the above research objectives, the thesis successively carries out the following research tasks:

Firstly , clarifying the basic theoretical issues of capital and human resources of enterprises through systematizing the fundamental theories of capital structure, factors affecting capital structure, the impact of capital structure on business operations, and lessons learned on capital structure planning of construction materials enterprises in the world.

Second , clarify and evaluate the current situation of labor productivity of enterprises in the construction materials industry in Vietnam through describing, qualitatively analyzing and quantifying the impact of factors on labor productivity of enterprises in the construction materials industry.

Third , assess the impact of CCNV on the cost of capital, risk, and TSSL of NY enterprises in the construction materials industry in Vietnam; clarify the strengths and limitations that still exist in CCNV of NY enterprises in the construction materials industry in Vietnam.

Fourth , propose some solutions to improve the human resource capacity of enterprises in the construction materials industry in Vietnam by 2025 in line with the socio-economic context of Vietnam and strategic orientation for the development of the construction materials industry.

3. Research object and scope

- Research object: Thesis research on capital structure of enterprises.

- Scope of research

+ Regarding space : The thesis limits the research sample to listed enterprises in the construction materials industry in Vietnam. The research sample includes 30 listed enterprises in the construction materials industry on the two stock exchanges HNX and HOSE. These are 30 enterprises with large capital scale and market share in the construction materials industry in Vietnam.

+ About time: The thesis studies the staffing of NY enterprises in the construction materials industry in Vietnam in the period 2009-2020.

4. Research methods and data sources

The thesis uses a combination of research methods to carry out the research tasks. The research methods used in the thesis are described in the diagram below:

Research mission

Research methods & data sources

Clarify theoretical issues on capital sources and capital structure of enterprises.

Method of analysis, comparison, synthesis. Based on previous studies on capital sources and capital structure, systematize the theoretical basis of capital sources, capital structure, factors affecting capital structure, impact of capital structure on business operation, and plan capital structure.

Clarifying the experience of capital structure planning of NY enterprises in the construction materials industry in the world and drawing lessons for Vietnam.

Case study method. The author selects two typical construction material enterprises, clarifies the characteristics of human resources and plans for human resources in these enterprises. From there, generalizes and draws lessons for NY enterprises in the construction material industry in Vietnam.

Clarifying the current situation of capital structure of enterprises in the construction materials industry, factors affecting capital structure, impact of capital structure on the operations of enterprises in the construction materials industry; thereby, proposing some solutions to improve the capital structure for enterprises in the construction materials industry.

Descriptive statistical method, assessing fluctuations and fluctuation trends to clarify the characteristics of employees of NY enterprises in the construction materials industry, average cost of capital, impact of employees on RRTC and TSSL;

Multivariate regression method (POOL OLS, REM, FEM, GMM) clarifies factors affecting labor productivity; the impact of labor productivity on the performance of enterprises in the construction materials industry.

5. Scientific and practical significance of the thesis

Theoretical contributions : The thesis provides additional empirical evidence on the capital structure of enterprises in the construction materials industry in Vietnam. Through clarifying the factors affecting the capital structure of enterprises in the construction materials industry in Vietnam as well as the impact of capital structure on WACC, risk and return on equity, the thesis tests the theories on capital structure of enterprises associated with a specific industry (construction materials) in the Vietnamese market. The thesis also presents a perspective on approaching the content of capital structure from the perspective of planning and making financial management decisions of enterprises.

Practical contributions : The conclusions of the thesis are the basis for corporate financial managers at construction material enterprises in Vietnam to build appropriate target CCNV to maximize the value of the enterprise and equity. At the same time, the thesis is also a useful reference source for policy makers, investors, and financial intermediaries in making decisions for construction material enterprises in Vietnam in accordance with the socio-economic context of Vietnam and the development strategy of the construction material industry until 2025.

6. Overview of research status related to the thesis topic

Capital structure is a topic that attracts the attention of many scholars as well as corporate financial managers. There have been many research works on this issue in the world and in Vietnam. In general, the studies focus on clarifying the following issues: (i) the existence of optimal capital structure; (ii) factors affecting the capital structure of enterprises; (iii) the impact of capital structure on the operation of enterprises.

6.1. On optimal capital structure

Up to now, the system of theories on CCNV has developed relatively fully and is continuously improved. However, among the theories there is no consensus on the existence or non-existence of an optimal CCNV.

According to M&M (1958), under specific hypothetical conditions of perfect capital markets and no taxes, capital structure is independent of firm value. The pecking order theory and market timing theory share the same view as M&M when denying the existence of optimal capital structure. The capital structure decision of a firm is not based on the optimal debt ratio but on liquidity, risk and information asymmetry. Accordingly, the firm chooses capital sources in the order of reinvested profits, debt and finally external equity (Myers and Majluf, 1984). Graham and Harvey (2001) argue that capital structure is the result of financing decisions, managers depend on market timing to make decisions to maximize firm value. Some recent empirical studies supporting the view that there is no optimal CCNV include: Lin (2007), Zeitun et al. (2007), Nieh et al. (2008), Talberg et al. (2008), Cheng et al. (2010), Onaolapo et al. (2010), Ruan et al. (2011), Khan

(2012), Ahmad et al. (2012), Tongkong (2012), Tsuji (2013), Ahmad et al. (2013), Hasan et al. (2014).

In contrast, the trade-off theory acknowledges the existence of optimal debt ratios. Kraus and Litzenberger (1973), Myers (1977) argue that firms will set a target debt ratio and will gradually move towards it. The target debt ratio is the point at which the marginal benefit equals the marginal cost when the firm uses debt. Typical studies in this school include: Jensen and Meckling (1976), Kim (1978), Grossman and Hart (1982), Jensen (1986), Diamond

(1989), Harris and Raviv (1990).

In Vietnam, a number of studies have shown the existence of optimal capital structure of enterprises in different industries and business fields. Do Van Thang and Trinh Quang Thieu (2010) studied the relationship between enterprise value (Tobin's Q) and CCNV (NPT/VCSH) of 159 non-financial companies listed on the Ho Chi Minh City Stock Exchange in the period 2006-2009. The research results showed that Tobin's Q reached its maximum value at D/E of 105%. Nguyen Thanh Cuong and Nguyen Thi Canh (2012) studied the capital structure of Vietnamese seafood processing enterprises in the period 2005-2010. The research results showed that there is a double threshold effect between CCNV (D/A) and enterprise value (ROE). The thesis showed that the optimal range of debt ratio that seafood processing enterprises should apply is below 59.27%. Tran Hung Son (2013) studied the construction of target capital structure for industrial manufacturing enterprises in Ho Chi Minh City. Vo Xuan Vinh and Nguyen Thanh Phu (2014) pointed out different debt thresholds for different industries. Accordingly, the optimal debt ratio of enterprises in the trading industry is around (15.87%; 44.52%), the real estate industry is around (41.02%; 73.00%), the transportation industry is less than 79.66%, the construction industry is less than 61.28%. Nguyen Thanh Cuong (2015) showed that there is a three-threshold effect when studying the capital structure of seafood enterprises in the South Central region. Nguyen Thu Ha's research (2019) shows that listed seafood enterprises in Vietnam should maintain a target debt ratio in the range of (0.43; 0.7).

=> Thus, the question of the existence of optimal debt ratio continues to be an open question, requiring more empirical evidence in different research contexts. In Vietnam, most of the studies related to this question are conducted in a certain economic sector to provide orientation on target debt ratio. The methods used are very diverse, in addition to the simple multivariate regression model, the authors also use threshold regression, dynamic regression, nonlinear regression functions to determine the optimal debt ratio.

6.2. Factors affecting the capital structure of enterprises

Most studies focus on applying theories of CCNV to quantify the impact of internal and external factors on the debt ratio of enterprises. Studies have shown that important factors affecting CCNV include: enterprise size, profitability,

Profit, asset structure, growth potential, solvency, business risk, corporate income tax, business development cycle. Specifically:

- Regarding asset structure: Asset structure is an important factor affecting the debt ratio of an enterprise. According to Harris and Raviv (1991), the large proportion of fixed assets increases the liquidation value of the enterprise because tangible assets constitute collateral, which has a greater value than intangible assets when the enterprise goes bankrupt. Rajan and Zingales (1995) argued that the larger the proportion of tangible fixed assets, the more debt a company uses because these assets, as collateral, reduce the agency costs of creditors. Similar conclusions were also found in the studies of Huang and Song (2002), Frank and Goyal (2003), Chen (2004), Salawu and Agboola (2008), Chakraborty (2010). However, Grossman and Hart (1982) argued that enterprises with low proportion of fixed assets often use more debt to prevent opportunistic behavior of managers. Therefore, the proportion of fixed assets has a negative impact on CCNV. Some studies give similar conclusions such as Berger and Urdell (1994), Zehra Reimoo (2008), Akinlo Okayinka (2011), Nadeem and Wang (2011).

- Regarding the scale of production and business: Research by Huang and Song (2002), Chen (2004) in developing countries shows that the size of an enterprise is positively related to debt, because large companies have low bankruptcy risks and costs, and less volatile cash flows. Research by Beven and Danbolt (2002) shows that the size of an enterprise is inversely proportional to short-term debt and positively proportional to long-term debt. Research by Chen (2004); Zehara Reimoo (2008); Salawu and Agboola (2008); Akinlo Okayinka (2011); Psillaki and Daskalakis (2009); Sheikh and Wang (2011) also show that the larger the scale, the more favorable it is for borrowing. On the contrary, research by Rajan and Zinggales (1995); Krem and Zingales (1995); Chittenden et al. (1996) argue that large firms have easier access to the stock market and therefore use less debt. Therefore, financial leverage in these firms will be lower (Kester, 1986).

- Regarding profitability: Research by Long and Maltiz (1985); Solberg and Zorn (1992) all argue that high profitability makes creditors less risk-averse, and willing to provide higher credit limits to businesses. There is a close relationship between profitability and financial leverage. The first reason is that the higher the profitability, the lower the probability that the business will face bankruptcy risk. This will make businesses give higher priority to borrowed capital, leading to an increase in financial leverage. However, there are also many opinions that profitable businesses will have more after-tax profits, so they will take advantage of this endogenous capital source. According to Titman and Wessel (1988), when other factors remain unchanged, businesses with high profitability will have lower financial leverage ratios.

- Regarding growth rate: Growth rate reflects the growth opportunities and future development prospects of the enterprise. Rajan and Zingales (1995) believe that enterprises

Firms with high growth rates in the future tend to limit debt because owners do not want to share benefits with creditors. Thus, growth rates are inversely proportional to debt ratios. However, there is also a view that firms with growth opportunities prefer to use debt instead of issuing shares to minimize the sharing of benefits to new shareholders. At the same time, firms with high growth rates are considered to be healthy in the loan market and have easy access to loans. In addition, with future development prospects, these firms may increase the amount of debt to maintain high growth opportunities in the future (Chen, 2003).

- Regarding corporate income tax rates: According to Modigliani and Miller (1958), tax rates are an important tool in determining the capital structure of a business. When faced with high corporate tax rates, businesses tend to borrow more to take advantage of tax shields (Miller, 1988). Therefore, corporate income tax rates are believed to have a positive relationship with financial leverage. However, debt will increase along with bankruptcy costs, so businesses tend to choose an optimal CCNV that balances the benefits of tax shields and bankruptcy costs (Myers, 1984). Warner (1977) argued that bankruptcy costs are often much lower than the benefits from interest tax shields, so in reality, the debt ratio of businesses is often higher than theoretical predictions. This also means that if a business has a large non-debt tax shield, it will reduce its incentive to borrow, thereby maintaining a low debt level. The larger the non-debt tax shield, the lower the debt ratio of the business.

- Regarding the number of years of operation : According to Abor (2008), the number of years of operation of a business is proportional to financial leverage. This is because the longer a business operates, the greater its credit reputation will be, making it easier to access loans. Diamond (1991) pointed out that the number of years of operation of a business is related to the transparency of information of the business in the credit market. In other words, long-standing businesses will minimize the risk of asymmetric information with creditors. Managing debts will be easier, helping to reduce intermediary costs. On the contrary, newly established businesses will have difficulty accessing loans, high credit risks, and high capital mobilization costs.

- Regarding ownership structure: Agency theory assumes that agency costs will arise from conflicts of interest between business managers and shareholders, due to the separation of ownership and control. This is a factor that significantly affects the capital structure of the enterprise. Agency theory shows that ownership structure can be used to minimize conflicts of interest between shareholders and managers (Jensen & Meckling, 1976), as well as conflicts between major shareholders and minority shareholders (La Porta et al., 1999). Ownership structure determines the organizational structure of the enterprise, and each different part plays a different role in corporate governance. Different corporate governance functions affect

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