How Does Corporate Governance Affect the Dynamic Capital Structure? Evidence from Listed Family Businesses in Vietnam

Most Vietnamese family companies are still operating under the control of the first generation and are preparing to transfer to the second generation. This paper is the first to examine how corporate governance affects the dynamic capital structure of listed family companies in Vietnam. We employ the dynamic Generalized Method of Moments (GMM) to analyze a balanced panel with 987 annual observations of 136 listed family businesses from 2005 to 2020 in Vietnam. Our empirical findings indicate that board size, board independence, and CEO duality reduce the leverage ratio in family businesses. Our findings support trade-off theory, agency theory, pecking order theory, and prior literature. Our findings are relevant for managers in the family business to adjust their capital structure which maximizes the shareholder benefits actively.