Tan Huy Cao

Type of the article: Research Article

Abstract
This study investigates the linear and nonlinear effects of ownership structure and financial leverage on corporate financial risk in Vietnam. Using panel data from publicly listed non-financial companies from 2014 to 2023, the analysis applies pooled, random-effects, and fixed-effects logit models, along with robustness checks based on linear probability and feasible generalized least squares estimations. The results reveal that financial leverage significantly raises the risk of financial distress, emphasizing the importance of capital structure in risk assessment. State ownership shows a nonlinear relationship with financial risk, with evidence suggesting a U-shaped pattern that becomes more evident in alternative model specifications. Conversely, institutional ownership and managerial ownership do not show statistically significant effects, indicating limited governance influence of these ownership types in the Vietnamese setting. Among control variables, profitability correlates with lower financial risk, while asset tangibility has a positive relationship; other firm characteristics do not display consistent impacts across models. These findings add to the literature by highlighting the role of ownership structure and leverage in influencing financial risk within institutional constraints. Policy-wise, the results suggest that firms should implement cautious leverage strategies, and regulators should carefully manage state ownership to balance its potential advantages and drawbacks.