Thesis Public Defense | VNP30 - Phạm Nam Phương

Leverage and performance under sustainability lens: sectoral evidence from Vietnam

Student: Phạm Nam Phương, VNP-30

Supervisor: Dr. Nguyễn Thị Tuyết Nhung

Abstract:

As Vietnamese firms expand and leverage becomes an increasingly common tool to finance growth, the question of when debt enhances performance—and when it undermines it—has become more critical than ever. This thesis examines how financial leverage affects firm performance in Vietnam and whether this relationship differs across industries classified by eligibility under the EU Taxonomy framework. Using an unbalanced panel of non-financial firms listed on the Ho Chi Minh Stock Exchange and the Hanoi Stock Exchange from 2012 to 2023, the study applies firm fixed-effects panel regressions with year controls and robust standard errors to account for unobserved heterogeneity. The findings show that financial leverage has a statistically significant negative impact on firm performance, confirming that excessive reliance on debt constrains operational efficiency in an emerging market context. While industry eligibility is explored as a potential moderating factor, the results indicate that the adverse performance effects of leverage remain broadly similar across eligible and non-eligible industries, with no robust evidence of systematic
heterogeneity. These findings suggest that eligibility-based industry classification is not statistically significant in the fixed-effects specification. By integrating eligibility into the analysis of leverage and performance, this study provides insights for managers, investors, and policymakers seeking to balance growth, financial stability, and sustainable development in Vietnam.

JEL Classification: G30, G32, O16, Q56
Keywords: Capital structure, financial leverage, firm performance, EU Taxonomy, Fixed-effects panel regression model