Relationship between cash holding and capital structure of Vietnamese public companies in the COVID-19 pandemic context

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Determining the capital and cash holdings pattern is among the most critical decisions of firm executives. This study investigates the link between cash holdings and capital structure to help executives consider the best pattern of capital and cash. The study collected a sample of 5,747 observations from public companies in Vietnam during 2019–2022 and employed the panel data regression method for analysis. The findings demonstrate a correlation between capital structure and cash holding ratio that is statistically significant. However, these relationships are inconsistent between the cash holdings and each component of the capital structure. Current debt and total debt ratios have a positive and linear association with cash holdings, while non-current debt ratio has a negative and nonlinear association. The study highlights a heterogeneous association of the cash holding ratio with three proxies of debt structure. The results reveal that, during COVID-19, the effects of the non-current debt ratio on cash holding and of cash holding on the current debt ratio have no statistical significance.

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    • Figure 1. Cash holding ratio of listed companies by year and industry
    • Figure 2. Results of the capital structure by year
    • Figure 3. Results of the capital structure by industry
    • Table 1. Instrument measurement
    • Table 2. Summary of data by year and business sector
    • Table 3. Descriptive statistics of variables
    • Table 4. Autocorrelation matrix results
    • Table 5. Results of Model 1 regression analysis from 2019 to 2022
    • Table 6. Results of Model 2 regression analysis from 2019 to 2022
    • Table 7. Cash holding ratio before and during COVID-19
    • Table 8. Capital structure of public companies before and during COVID-19
    • Table 9. Regression results of Model 1 during COVID-19
    • Table 10. Regression results of Model 2 during COVID-19
    • Conceptualization
      Pham Thi Lan Anh, Dang Ngoc Hung
    • Investigation
      Pham Thi Lan Anh
    • Methodology
      Pham Thi Lan Anh, Dang Ngoc Hung, Vu Thi Thanh Binh
    • Writing – original draft
      Pham Thi Lan Anh, Dang Ngoc Hung, Vu Thi Thanh Binh
    • Formal Analysis
      Dang Ngoc Hung
    • Data curation
      Vu Thi Thanh Binh
    • Visualization
      Vu Thi Thanh Binh
    • Writing – review & editing
      Vu Thi Thanh Binh