| TRƯỜNG ĐẠI HỌC HẢI PHÒNG GROWTH OPTION AND CAPITAL STRUCTURE EVIDENCE FROM AN EMERGING MARKETS ThS. Nguyễn Công Thành Department of Economics amp Finance - School of Business amp Management RMIT University Vietnam TS. Nguyễn Phúc Cảnh Deputy Editor-in-Chief Journal of Economic Development JED Trƣờng Đại học Kinh tế Tp. HCM ThS. Phạm Thị Anh Thƣ School of Economics University of Rennes 1 Abstract This study examines the impacts of firm growth opportunities on capital structure of Vietnamese firms. By employing Pooled Ordinary Least Squared POLS Fixed Effects Models FEM and Random Effects Models REM techniques for balance panel data we find significant statistic evidences supporting for pecking order theory which defines the positive effects of growth option on capital structure. Interestingly we find that capital structure is positively affected by tangibility but this effect appears to be a consequence of the impact of tangibility on long-term debt rather than short-term debt. Keywords capital structure growth option emerging markets pecking order theory trade-off theory. JEL classifications G31 G34. 1. Introduction In the financial literature the relationships between capital structure and growth options are explained in two main theories including trade off theory and pecking order theory. Numerous studies have been done to examine the relationships between capital structure and growth option in the economic field of finance and capital analysis following these theories for instance see Adedeji 2002 Antoniou et al. 2008 Antoniou et al. 2008 and Antoniou et al. 2008 . In fact these empirical works on the capital structure and growth options under the light of trade off theory and pecking order theory have been taken in the context of developed countries such as US Japan UK which have strong market disciplines corporate governance and less agency problems Harford et al. 2012 . Some recent studies consider these theories in the context of emerging countries such as
