The relationship within coefficient out-of economic leverage and economic overall performance is a positive dating
The brand new power ratio (LR) features a positive effect on ROEwhen the latest financial power ratio grows by step 1 unit, the security proportion develops because of the 0.045 tools. From the model suggests that if ratio of average total possessions and you may security develops or perhaps the economic flexibility away from businesses reduces, brand new economic performance out of enterprises grows.
The new much time-title investment ratio (LAR) have a confident connection with the ROE. If the proportion off much time-identity possessions grows from the step one equipment, the fresh ROE expands by 0.225 units. The fresh a lot of time-label resource proportion shows how much cash the much time-identity secure capital is utilized by the collateral and long-title personal debt to finance the a lot of time-name assets. From the model suggests that, the ability of enterprises to fund enough time-term assets which have secure a lot of time-title meet slovenian women in america funding grows, the latest monetary efficiency of people develops.
The debt-to-possessions ratio (DR) provides an optimistic affect the fresh new ROE. We come across when the new proportion out-of debt so you can property increases by the step 1 equipment, the fresh new go back to security expands from the 0.047 products. The debt to help you investment proportion shows simply how much of one’s businesses possessions are from credit. Enterprises borrowing from the bank smaller shows that the monetary independency is good. About design, the new reduced brand new enterprise is borrowing or even the high their monetary liberty might be, the greater the fresh monetary abilities of your own firm is actually.
This new notice-resource ratio (E/C), monetary influence proportion (LR), long-term property proportion (LAR) and you will loans-to-Advantage ratio (DR) independent variables all of the keeps influences into the ROE. Hence, we come across your resource design provides an impact on the economic performance out-of companies.
The organization dimensions (SIZE), the fresh ratio from repaired assets (FAR) while the growth rate (GROWTH) handle details the has self-confident dating to ROE. Specifically, the organization Rates (GROWTH) comes with the highest amount of dictate toward regression coefficient, + 0.058 and therefore in the event that Growth rate increases because of the 1 unit, the fresh new come back for the collateral expands by the 0.058 devices. If the revenue of your own after the year is higher than brand new cash of your own early in the day seasons, it may be know one merchandise in the industry try turned reduced, the latest consult of one’s marketplace for factors is larger than the brand new prior seasons, the firm development of companies is the best.
5.4. Discussion
The purpose of the study is to understand the impact of capital structure on the financial performance of listed pharmaceutical enterprises on Vietnam’s stock market. According to the results of correlation analysis and regression analysis, rejecting the H0 hypothesis, accepting the H1 hypothesis, means that there is a relationship between capital structure and financial performance of listed pharmaceutical enterprises in Vietnam stock exchange. The results of the study are similar to those of Krishnan and Moyer (1997), Arbor (2005), Zeitun, Tian, and Keen (2007), Gill, Biger, and Mathur (2011), Doan (2014), and Le (2017).
Depending on the consequence of regression research, the relationship within coefficient from thinking-resource in addition to monetary show of sector organizations is the reverse relationship. Which bad matchmaking means that when reducing the coefficient off mind-money or decreasing the proportion of security accounted for the full financing, brand new financial results of one’s organization increases. This completion is similar to the studies away from Trinh and you can Nguyen (2013).
Which relationship ensures that by increasing the control proportion otherwise cutting the common security and you will raising the mediocre complete possessions, brand new economic results of enterprise develops. The outcomes of the studies are similar to that from Berger and you may Patti (2006), Chu, Nguyen, and Ngo (2015).