THE IMPACT OF CAPITAL STRUCTURE ON STOCK RETURNS

Abstract

In these current years, Vietnam stock market was no longer hot like over the first few years after establishing. However, this is a young and potential market with so many business opportunities for investors. We believe that in coming years Vietnam stock market will be exciting again and attract not only domestic investors but also international investors. Because of this reason, we chose this topic to research about stock market and find out the investment direction which bring maximum return. Prepare a business plan is necessary at the moment, making a rational invest strategy will bring to company practical benefit. This paper examines the effect that the capital structure of a firm has on its stocks returns in Vietnamese stocks market for a period of 6 years from 2009 to 2015. The following models are tested: one-factor model, the Capital Asset Pricing Model, the Fama and French three factors model. The finding of this study are the capital structure factor contains significant information content and it adds a considerable portion in the explanation of stock returns. The results of this report may provide a significant impact on the financial managers, financial advisors, and investors. This research can help investor have clearly a clear view of impact of capital structure to market return. Base on that, they can make accurate decision in stock investing