The Stock market and firm investment in Vietnam
University of the Thai Chamber of Commerce
This thesis consists of two essays on the correlation between the stock market and firm investment from two perspectives: information channel and equity financing channel. The first essay investigates the relationship between the stock market and firm investment from the price informativeness perspective. Using the unbalanced panel dataset of Vietnamese listed firms from 2007 to 2017, the results show that the stock market valuation is positively related to firm investment. Secondly, investment of firms with higher level of price informativeness is likely less sensitive to their stock prices than that of firms with lower level of price informativeness. In addition, the development of financial markets plays an important role in determining corporate investment level and investment-to-stock price sensitivity. The regression results also suggest that the role of price informativeness in investment-to-stock price is not much different among the groups of firms (firms with high-quality auditors vs. low-quality auditors as well as small firms vs. large firms). The second essay examines how the level of equity dependence affects the sensitivity of corporate investment to stock price. Using the panel dataset of Vietnamese listed firms over the 2007 - 2017 period, the results indicate that the level of equity dependence increases the sensitivity of corporate investment to stock price. In addition, the investment of equity-dependent (higher level of Kaplan and Zingales index) firms is more sensitive to stock price than of less-equity-dependent (lower level of Kaplan and Zingales index) firms. Moreover, the sensitivity of corporate investment to stock price are even stronger for firms with small size, low dividend payout, new equity issuance, and high growth opportunity.
Quynh Trang Phan (2019) The Stock market and firm investment in Vietnam.