Cost of Debt and Political Connection of Firms in Vietnam

  • Thi Le Ha Nguyen International University, School of Business Administration, Quarter 6, Linh Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam
  • Huynh Chau Gia Bao International University, School of Business Administration, Quarter 6, Linh Trung Ward, Thu Duc District, Ho Chi Minh City, Vietnam, Vietnam National University, Ho Chi Minh City, Vietnam
Keywords: Cost of Debt, Political Connection, Politically Connected Firm, Emerging Economy

Abstract

The purpose of the paper is to present a proposed study on the relationship between the interest rate charged on debt and political connection of firms in Vietnam. Data on cost of debt and political connection from 600 Vietnamese public firms over a period from 2016 to 2018 is gathered to examine the research hypotheses. The present study extends the previous research that finds politically connected firms (PCON) are generally considered as higher risk than that of non-PCON firms by both the market and audit firms in emerging economy, by providing the evidence in Vietnam that lenders also view these firms as higher risk.

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Published
2020-01-30
Section
Articles