The choice between bond issuance and other capital structure decisions: Evidence from listed companies in Vietnam

Abstract

This study examines the factors influencing firms’ decisions to issue bonds versus other capital structure options, based on a panel of 325 firms and 1,662 firm-year observations from 2016 to 2024. Results show that firms with negative return on assets (ROA), but strong liquidity, large size, and high leverage are more likely to issue bonds. These traits suggest that large, debt-experienced firms with stable liquidity prefer bond financing. Regression analysis also highlights the role of macroeconomic conditions. GDP growth positively affects the likelihood of bond issuance, while inflation has a negative effect; both are significant at the 10% level. Additionally, bond market development, measured by the bond market size-to-GDP ratio, positively influences bond issuance at the 1% level. In contrast, the long-term domestic credit balance has a significant negative impact at the 1% level. The findings offer policy implications for firms seeking financing strategies and for policymakers promoting capital market development.