The Impact of Capital Investments on Firm Financial Performance – Empirical Evidence from the Listed Food and Agriculture Companies in Vietnam

Dang Thi Hai Yen 1 , Nguyen Thi Huong 1 and Dao Thi Hoang Anh 1

1Faculty of Accounting and Business Management, Vietnam National University of Agriculture, Hanoi 131000, Vietnam
Received: May 11, 2022 /
Revised: Mar 29, 2023 /
Published: Mar 29, 2023

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Capital investment is one of the most important financial decisions of a firm, which effects the business survival. This paper investigates the impact of capital investments on firm performance to provide an insight for future capital investment decisions of companies. The study uses unbalance panel data gathered from 62 companies which covered 688 observations of listed food and agriculture sector in Vietnam stock exchange during the period 2009 – 2020. To control for unobserved individual effects, the random effect estimator was employed. Profit margin (PM) is used as a proxy for firm performance, while independent variables are capital investment rate in both short-term and long-term effect, equity to total assets ratio, firm size and tangible to fixed assets ratio. The results indicate that capital investments have statistically significant positive impact on long-term performance of the analyzed enterprises. This outcome is in accordant with many previous studies. Especially in the context of Vietnam listed food and agriculture companies have high level of capital investment, a portion increase in capital investment rate will increase the company profit margin. Other variables also have statistically significant relationship with profit margin, in details, equity ratio and size have positive effect while tangible assets ratio has negative effect on firm performance. Therefore, the research suggest firm managers should choose the appropriate capital investment strategies in long-term perspective, within the consideration of equity ratio, economics of scale and tangible assets investment ratio to get the most efficient performance.

Keywords: Capital investment, Firm financial performance, Profit margin, CapEx, panel data

Article Details

How to Cite
Yen, D., Huong, N., & Anh, D. (2023). The Impact of Capital Investments on Firm Financial Performance – Empirical Evidence from the Listed Food and Agriculture Companies in Vietnam. Vietnam Journal of Agricultural Sciences, 6(1), 1735-1744.


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