Factors Affecting the Financal Leverage of Vietnam Businesses

The study assesses the impact of factors affecting the financial leverage of Vietnamese firms. This paper uses Bayesian linear regression model to estimate the relationship of the data series to examine the impact of the characteristics of Vietnamese firms on financial leverage. The results demonstrated that there are a number of factors that positively affect the financial leverage of firms, including: workforce, annual turnover, and export status, gender of business owners and qualifications of the business owner. However, the age of the business has a negative impact on financial leverage. On the basis of these findings, the paper also suggests a number of policies to use financial leverage more effectively on firm value: (1) large-scale, low-debt firms have may consider increasing the debt ratio to take advantage of the tax shield. (2) financial managers of the enterprise need to establish, forecast and evaluate in detail the company’s growth ability in different periods (3) train to improve professional knowledge courses for business owners and staff of economic and financial managers; (4) increasing the gender diversity of board members as a tool to control the level of financial leverage of the company.