Investment expenditures : Sources of financing under political socioeconomy - A study of listed companies on Ho Chi

Abstract

By means of accounting data and political connection of listed non-financial firms on the Ho Chi Minh stock exchange, this study documents that HOSE-listed companies still especial financial constraints to both internal and external finance, even after the renovation and rapid growth of equity markets since 1990s and the strong privatization trend in 2010s. The investment expenditures sensitivity for private firms are significantly high to all aspects of internal and external finance. This study also uncovers that firms who locate in major cities, operate in non-regulated industries and belong to the medium size face especially financial constraints. Meanwhile, it is discovered that government-tied enterprises such as SOEs and regulated-industry firms demonstrate an almost-absolute dependency on bank loans, signaling the existence of credit misallocation in Vietnam.