Cuadernos de Economía

ISSN : 0210-0266

The Impact of Capital Structure on Profitability of Listed Companies in Vietnam Stock Market: A Non-Linear Analysis

  • Cuc, Thi Thu Nguyen , Vinh University, Nghe An, Vietnam
  • Vinh, Thi Thanh Nguyen , Thai Nguyen University of Economics and Business Administration, Thai Nguyen Province, Vietnam
  • Anh, Thi Dieu Ho , Vinh University, Nghe An, Vietnam
  • Thuy, Thi Bich Nguyen , Vinh University, Nghe An, Vietnam
  • Trinh, Huu Nguyen , School of Political and Administrative Sciences, Vietnam National University Ho Chi Minh City, Vietnam


Capital structure; profitability; Vietnam; Hanoi stock exchange; panel ARDL & panel NARDL..


This study assesses the impact of capital structure on the profitability of companies listed on the Vietnam Stock Exchange. Specifically, 342 companies (from various industries) listed on the Hanoi Stock Exchange of Vietnam were chosen for this purpose between 2016 and 2022. The capital structure is measured by the ratios of total debt to assets, short-term debt to assets, and long-term debt to assets. In contrast, profitability is measured by return on equity. The information for the abovementioned variables is extracted from the publicly available quarterly financial statements of the selected companies for 2016-2022. For empirical evaluation, this research employs panel ARDL and panel non-linear ARDL (NARDL) estimation methods, making it a novel contribution to the literature. The findings of the panel ARDL estimation indicate that short-term debt-to-asset ratio and total debt-to-asset ratio positively impact the companies' profitability. In contrast, the long-term debt-to-asset ratio has a negative impact. The results of the panel NARDL estimation indicate that positive shocks in capital structure increase the profitability of companies, while negative shocks in capital structure decrease it. The study provides policies for Vietnamese businesses based on its findings.