The Impact of Capital Structure on Business Performance

financial decisions and influence the debt and equity ratios that a firm will choose (Shi, 2010). Therefore, a firm's capital structure choice depends on who actually controls the firm (Pindado & La Torre, 2011).

In addition, from the perspective of private ownership and state ownership : Large state-owned enterprises often have advantages in borrowing capital from banks, especially state-owned commercial banks. Kasseeah (2008), Qi et al. (2000) research on the Chinese market shows that banks make lending decisions not based on the criteria of enterprise profits but are influenced by individuals representing state capital in the enterprise. If considered from the perspective of domestic ownership and foreign ownership , enterprises with high foreign ownership, due to difficulties in accessing domestic loans and restrictions on raising foreign loans, often have lower loan ratios.

- About the firm's life cycle: The Corporate Life-Cycle Theory has been applied to organizational research since the 1960s. According to Chandler (1962), at each stage of the development process, there will be changes in financial decisions in general and capital structure in particular due to changes in strategy and structure. Studies examining the change in debt ratios at each stage of the life cycle use different methods to determine the number of stages as well as the characteristics of each stage. The study by Castro et al. (2016) 1 is based on the classification of Dickinson (2011) but adjusted for growth rate and risk because these are two factors that show clear differences between stages. The corporate life cycle is divided into three stages: introduction, growth, and maturity. The study of Rehman & Yu (2016) 2 divided the life cycle of a business into three stages: growing, mature, and decline. This study used a multivariate classification based on the criteria: dividend payout ratio, business age, and revenue growth rate. This is a classification method that is quite commonly used in previous studies such as the study of Jekins et al. (2004), Ashsan et al. (2016) 3 . The study of Dehan (2014) 4 emphasized the characteristics of the business industry and used this criterion to classify businesses. Businesses in the early stages of the life cycle, compared to those in the

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1 Castro, P., Fernández, MTT, Amor-Tapia, B., Miguel, A. (2016). Target leverage and speed of adjustment along the life cycle of Éuopean listed firms. Business Research Quarterly, 19, 188-205.

2 Ajid ur Rehman, Man Wang, & Haoyang Yu (2016). Dynamics of financial leverage across firm life cycle in Chinese firms: an empirical investigation using dynamic panel data model. China Finance and Economic Review 2016, 4-19.

3 Ahsan T, Wang M, Qureshi MA (2016b) How do they adjust their capital structure along their life cycle? An empirical study of capital structure over life cycle of Pakistani firms. J Asia Bus Stud 10(3):276–302

Jenkins DS, Kane GD, Velury U (2004) The impact of the corporate life-cycle on the value-relevance of disaggregated. Rev Account Finance 3:5–20.

4 Chase Parker DeHan (2014). Capital Structure over the Life Cycle. Advances in Business Research, Vol.5, 16-32.

Mature businesses tend to finance more with equity than with debt or bond issuance. Frieinghaus et al. (2005) research, based on the theoretical framework of Adizes (1979) to identify 10 stages in the life cycle of a business. The research was conducted on 81 businesses in South Africa and showed that financial managers adjusted the capital structure to assess the appropriateness of the capital structure at each stage of the business's development.

Previous studies have also clarified the characteristics of capital structure of enterprises in countries, industries, and business fields. The capital structure of enterprises in developing countries is attracting the attention of many studies because most of the theories and empirical evidence on capital structure are conducted in developed countries. The study by Deesomsak et al. (2004) on the characteristics of capital structure of countries in the Asia-Pacific region shows that enterprise size has a positive impact on capital structure; growth and solvency have an opposite impact. The study by De Jong et al. (2008) conducted on enterprises in 42 countries around the world shows that the impact of enterprise factors on capital structure differs between countries.

In Vietnam, research on factors affecting the capital structure of enterprises has provided diverse empirical evidence. Tran Dinh Khoi Nguyen and Ramachandran (2006) conducted a study on 558 small and medium enterprises in the period of 1998-2001 and showed that enterprise size, business risk, relationship with banks and revenue growth rate are positively correlated with the capital structure of enterprises. In contrast, profitability and asset structure are negatively correlated with the debt ratio of enterprises. Similarly, Truong Dong Loc and Vo Kieu Trang (2008) also showed the positive impact of revenue growth rate and enterprise size on capital structure. Research by Doan Ngoc Phi Anh (2010) on 428 enterprises listed on HOSE and HNX found that business efficiency, business risk, asset structure are negatively correlated with the capital structure of enterprises, but enterprise size varies in the same direction as the capital structure of enterprises. Le Thi Minh Nguyen (2016) studied 17 cement enterprises in the period 2007-2013, the profitability, age of the enterprise, the proportion of state shares, non-debt tax shields, had a negative impact on the capital structure of cement enterprises. Enterprises with large scale, high proportion of fixed assets had a high long-term debt ratio. Tran Hung Son (2013) also found similar results and pointed out the difference between the factors affecting the capital structure of unlisted enterprises and listed enterprises. The study of Vo Xuan Vinh (2017) on listed enterprises at HOSE in the period 2006-2015 showed that the size of the enterprise and the proportion of fixed assets had a positive impact on the debt ratio; at the same time, this impact was different between short-term debt and long-term debt. Research by Thu Minh Thi VU et al. (2020) clarifies the impact of ownership structure on employee performance of 336 listed enterprises on HOSE in the period 2015-2019 and shows that the size of the board of directors

governance, state ownership, and the level of concentration of ownership structure have a positive impact on CCNV; foreign ownership has a negative impact on CCNV; no correlation was found between the level of independence of the board of directors, ownership of managers and CCNV. Some studies on the impact of corporate governance on CCNV in Vietnam include An Thai (2013) on a sample of 261 enterprises listed on HOSE in the period 2007-2014 showing a negative correlation between foreign investment and the short-term, general, and market debt ratios of enterprises; Thi Phuong Vy Le and Kathy Tannous (2017) pointed out the negative impact of foreign ownership on the debt ratio, the positive impact of state ownership and ownership of managers.

=> Thus, to clarify the factors affecting the CCNV of enterprises, the authors base on the theories of CCNV to build a quantitative model suitable for each industry and each specific market. At the same time, previous studies also developed research methods suitable for each object and scope of research to provide a multi-faceted picture of CCNV.

6.3. Impact of capital structure on business performance

Based on the theories of human resource management, researchers have developed theories on the correlation between human resource management and business performance of enterprises. These works can be divided into 4 groups based on the research results: (1) Human resource management has no impact on business performance of enterprises; (2) Human resource management has a linear and positive impact on business performance of enterprises; (3) Human resource management has a linear and negative impact on business performance of enterprises; (4) the relationship between human resource management and business performance of enterprises is nonlinear and there exists an optimal human resource management for each enterprise.

+ Capital structure has no impact on the value and performance of the enterprise.

M&M's (1958) proposition on the impact of capital structure on firm value states that under perfect capital markets and no corporate income tax, the capital structure decision is independent of firm value. In other words, a firm cannot increase its value by adjusting its capital structure. When considering the impact of tax shields, M&M (1963) concluded that the value of a levered firm is equal to the value of an unlevered firm plus the present value of the benefit from the tax shield of debt. Rajhans et al. (2013) conducted a study on 16 Indian listed companies during the period 2002-2011 and showed that capital structure and dividend policy have no impact on firm value.

+ Positive impact of CCNV on business performance of enterprises

Abor (2005) found a positive impact of debt ratio on ROE of 20 listed companies in Ghana during the period 1998-2002. Gill et al. (2011) also observed a positive relationship between debt ratio and ROE in a sample of 272 service and manufacturing companies listed in New York during the period 2005-2007. Ater (2017) conducted a study on 36 listed companies in Nairobi-Kenya during the period 2011-2015 and found that CCNV has a positive impact.

to the value of the enterprise. Antwi et al. (2012) found a positive impact of CCNV on the value of the enterprise of 34 listed enterprises on the Ghana Stock Exchange (GSE) in 2010.

Empirical evidence in Vietnam is found in the study of Le Thi Phuong Vy et al. (2013) on 203 listed enterprises in the period 2008-2011, Vo Minh Long (2017) on listed enterprises on HOSE. In addition, the research results also indicate the existence of maximum and minimum debt ratio thresholds in enterprises.

+ The negative impact of CCNV on the business performance of the enterprise.

Majumdar and Chhibber (1999) found statistically significant evidence of a negative relationship between CCNV and financial performance on a sample of 1,000 firms in India during the period 1988-1994. Gleason and Mathur (2000) also found a negative impact of debt ratio on ROA of retail firms in 14 European countries. Zeitun and Tian (2007) studied 167 firms in Jordan during the period 1989-2003 and found similar results. Hasan et al. (2014) reported a negative impact of CCNV on ROA but did not find a statistically significant impact on ROE and Tobin's Q.

In Vietnam, Nguyen Huu Huan and colleagues (2014) studied the relationship between capital structure and enterprise value, and determined the debt thresholds affecting enterprise value. The research data included 517 non-financial enterprises listed on the two stock exchanges in Ho Chi Minh City and Hanoi in the period of 2010 - 2012. The research results showed that the negative impact of CCNV on ROE but had no impact on Tobin's Q.

+ There is a nonlinear relationship between employee turnover and business performance.

Nieh et al. (2008) studied the optimal capital structure for electronics companies listed on the Taiwan Stock Exchange. This study used panel data for a sample of 143 companies from 1999 to 2004 with two indicators of return on equity (ROE) and earnings per share (EPS), representing the value of the company. The research team used the Hansen threshold regression model to produce the results: The appropriate debt ratio for these companies is from 12.37% to 51.57% and the optimal debt ratio should be in the range of 12.37% to 28.7%, which will increase the value of the company.

Lin et al. (2011) conducted a study to answer the question of whether debt affects the value of Taiwanese firms. The sample of the study was 196 firms in Taiwan from 1993 to 2005. The study found a two-threshold effect between debt ratio and firm value, which were 9.86% and 33.33%. When the debt ratio was lower than 9.86%, firm value as measured by Tobin'Q increased by 0.0546% corresponding to a 1% increase in debt ratio. When the debt ratio was between 9.86% and 33.33%, firm value increased by 0.0546%.

increased by only 0.0057%. Therefore, this study suggests that the optimal debt ratio is below 33.33% and at this level, the firm value does not increase. However, this study does not provide sufficient evidence on the relationship between debt ratio and firm value when the debt ratio is greater than 33.33%.

Cheng et al. (2010) studied the impact of capital structure on the value of listed enterprises on the Chinese stock market. The study used panel data for a sample of 650 enterprises in the period 2001 - 2006 with ROE representing enterprise value and capital structure as Debt ratio (total debt/total capital) representing the capital structure of the enterprise. The authors used a threshold regression model to assess the impact of capital structure on enterprise value. The research results show that enterprise value will increase when the debt ratio is lower than 53.97%, that is: When the debt ratio is lower than this level but the enterprise increases debt and increases only to 53.97%, it will increase enterprise value. In addition, the research results also show that: Enterprise value is still high but will start to decrease gradually when the debt ratio is between 53.97% and 70.48% and they also believe that enterprise value will decrease sharply when the debt ratio is greater than 70.48%.

Cuong et al. (2012) studied the impact of capital structure on enterprise value in the Vietnamese seafood processing industry. The study used a panel data regression model based on a sample of 92 Vietnamese seafood processing enterprises, from 2005 to 2010. Return on equity (ROE) represents enterprise value and debt ratio (total debt / total capital) represents enterprise capital structure. The research results show that: there is a threshold between debt ratio and enterprise value. If the debt ratio is lower than 59.27%, enterprise value increases, but if the debt ratio is higher than 59.27%, enterprise value tends to decrease.

In Vietnam, Vo Xuan Vinh and colleagues (2014) used the Hansen (1999) threshold regression method and the results showed the impact of the optimal debt ratio on the value of the enterprise represented by the Tobin's Q index. The authors concluded that the optimal debt ratio exists in a number of industry groups, specifically the wholesale industry (15.87% - 44.52%), real estate industry (41.02% - 73.00%), transportation industry (<79.66%), and construction industry (<61.28%).

=> Thus, studies on the impact of human capital on business performance are mostly empirical studies in different research contexts. These studies consider the question of whether human capital affects business value, and if so, how to describe this correlation quantitatively. This question is closely related to whether there is an optimal human capital for a business. However, empirical evidence is very limited.

diverse and it is very difficult to come to a final conclusion when assessing the impact of CCNV on business performance.

6.3. Summary of studies on capital structure

After an overview of the capital structure, some conclusions can be drawn as follows:

Firstly , the theories on human resource management are not identical but do not exclude each other. The inconsistency in the contents related to human resource management is due to the partial research method. The theories contribute to complement each other to create a comprehensive picture of the enterprise's human resource management.

Second , empirical evidence to test theories does not give a single result because: (1) theories predict qualitatively rather than quantitatively; (2) difficulty in finding representative variables for factors affecting CCNV such as: agency costs, bankruptcy costs, transaction costs, ...

Third , studies show that there are eight basic factors related to enterprises (enterprise size, asset structure, profitability, growth potential, solvency, business risk, corporate income tax and non-debt tax shield), institutions, laws and financial markets that affect the choice of CCNV of enterprises. The impact of the above factors is inconsistent across different countries, across different industries, and across enterprises in the same industry.

Fourth , empirical evidence on the impact of CCNV on firm value and business performance is inconsistent due to different research contexts, sample sizes, and research methods. Some studies show the existence of an optimal capital structure, others indicate a threshold for the impact of debt ratio on firm value, but many studies do not show a statistically significant impact of CCNV on firm value.

6.4. Gaps in research

In recent years, there have been more and more studies on CCNV as well as CCNV for NY enterprises in the construction materials industry in Vietnam. However, there are still gaps that need to be further researched and clarified.

- Regarding research content: The construction materials industry includes many small sub-sectors such as cement, steel, tiles, construction stones, etc. Currently, research on CCNV for the construction materials industry mainly focuses on each specific sub-sectors, there is no comprehensive and comprehensive research on CCNV for the entire construction materials industry. On the other hand, research focuses on clarifying the factors affecting CCNV and the correlation between CCNV and enterprise value and business performance. Some studies have examined the behavior of managers when making CCNV decisions by comparing the regression model results with the results of interviews with managers.

financial management; through clarifying the CCNV and CCNV adjustment behavior through the development stages of the enterprise. However, these studies are not many, especially in Vietnam.

- Regarding the scope of the study: Previous studies on the staffing of construction material enterprises in the construction material industry in Vietnam were conducted over a period of 5 to 7 years, when the industry was in a certain stage of the business cycle. This resulted in the research results not allowing to monitor the staffing adjustment behavior of managers according to each stage of the enterprise life cycle and the industry's business cycle. Therefore, the thesis conducts research on the staffing of construction material enterprises in the construction material industry in Vietnam during the period from 2009-2020. This is the period when the production and business activities of construction material enterprises in the construction material industry go through different stages. Expanding the scope of the study in terms of time will provide more comprehensive research results on the staffing of construction material enterprises in the construction material industry in Vietnam.

Thus, the thesis "Capital structure of listed enterprises in the construction materials industry in Vietnam" is an independent research topic and does not overlap with any previous research work in terms of research object, scope and content.

7. Results achieved and new contributions of the thesis

Regarding the approach : The thesis examines the theory of human resource management in relation to the development strategy and life cycle of the enterprise. Therefore, to build and perfect the financing policy, the enterprise financial manager must consider the enterprise's current human resource management as well as adjust this human resource management in relation to the strategic business goals of each stage in the enterprise's life cycle.

Regarding content : The thesis provides comprehensive research results on capital structure as well as the behavior of financial managers when making decisions on human resources of NY enterprises in the construction materials industry in Vietnam.

About the context : The thesis studies the staffing of construction material enterprises in Vietnam in the context that construction material enterprises have just gone through a difficult period, requiring restructuring in terms of production, finance and operating apparatus. Enterprises need to develop a financial strategy, including a funding strategy to meet the strategic development goals of the construction material industry until 2030, with a vision to 2045.

8. Thesis layout

In addition to the introduction and conclusion, appendix, list of references, list of published works of the author, the thesis consists of 3 chapters:

Chapter 1 : General theory of corporate capital structure

Chapter 2 : Current status of capital structure of listed enterprises in the construction materials industry in Vietnam

Chapter 3 : Solutions to improve the capital structure of listed enterprises in the construction materials industry in Vietnam

CHAPTER 1: GENERAL THEORY OF ENTERPRISE CAPITAL STRUCTURE

1.1. Business capital

1.1.1. Concept of business capital

To conduct production and business activities in a market economy, enterprises need to have basic factors including: Labor, labor objects and labor materials. To do so, enterprises need to advance a certain amount of money appropriate to the scale and business activities. This amount of money is used to purchase input factors of the production and business process. The entire value advanced initially and in the following stages to serve production and business activities is called business capital.

Enterprises can mobilize this amount of business capital from many different entities, forming a source of capital for the enterprise. The source of capital reflects the origin, the place where the amount of business capital that the enterprise mobilizes arises, serving production and business activities. In addition, the term "funding source" is also used to indicate the origin of the amount of money the enterprise has, serving production and business activities. Therefore, it is necessary to clearly distinguish between capital sources and funding sources. Capital sources only include sources of money that create an increase in the total assets of the enterprise; meanwhile, funding sources are a broader concept, including depreciation funds, money recovered from liquidation of assets, money obtained from transferring current assets to serve investment in purchasing and forming assets.

=> Capital is the source of forming business assets for the enterprise. It is the amount of money that the enterprise mobilizes to purchase and form assets to serve production and business activities.

1.1.2. Classification of capital sources

a. Based on capital ownership relationship:

Based on this criterion, the capital of an enterprise includes Equity and Liabilities.

* Equity:

Is the capital owned by the business owner. The business owner can be an individual, an organization that contributes capital, the Government, or shareholders who buy and hold shares. The source of equity includes the following components: owner's investment capital, capital surplus, and retained earnings. Of which:

+ Owner's equity includes initial capital contributions and additional capital contributions during the business's operation by the business owners.

+ Retained profit after tax: is a part of profit after tax retained by the business owner to increase long-term capital, serving the reinvestment process and expanding production and business activities.

For the type of joint stock company, the source of equity of these enterprises also includes a part of capital surplus - this is the difference between the par value of issued shares compared to the actual issuance price.

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