Doctoral Thesis Capital Structure, Strategic Competition, and Governance

Defended on Thursday, 27 November 2008


This thesis consists of four studies on the interactions of capital structure and product market competition, and on several aspects of governance, firm financing and growth. The first study investigates how competitive behavior and market uncertainty affect the capital structure of a firm in the U.S. manufacturing. We show that demand uncertainty is positively related to leverage for firms in both the Cournot and the Bertrand samples. Cost uncertainty has a significantly positive impact on the leverage of Cournot firms, but plays a negligible role for Bertrand firms. In the second study, we examine the joint determination of capital structure and market share in U.S. manufacturing firms. We provide evidence that in Cournot (Bertrand) competition, leverage negatively (positively) affects market share. Market share is shown to have a negative impact on leverage in Cournot firms, but no impact on leverage in Bertrand firms. Both studies highlight the role of firms’ competitive behavior in the product market in their capital structure decisions. The third study analyzes the importance of firm-specific and country-specific factors in the leverage choice of firms from 42 countries around the world. We find that firm-specific determinants of leverage differ across countries, while prior studies implicitly assume equal impact of these determinants. Although we concur with the conventional direct impact of country-specific factors on the capital structure of firms, we show that there is an indirect impact because country-specific factors also influence the roles of firm-specific determinants of leverage. Finally, in the forth study, we provide a firm-level analysis of the relation between corruption, growth, and public governance in Vietnam. Our results indicate that corruption significantly hinders the growth of Vietnam’s private sector. However, corruption is not detrimental for the growth in state sector. Our study emphasizes the role of local institutions and governance factors in affecting corruption


capital structure, leverage determinants, firm-specific factors, country-specific factors, strategic competition, governance, corruption

Time frame

2005 - 2008

Preferred reference

T.T. Nguyen, Capital Structure, Strategic Competition, and Governance, Promotor:prof.dr. Abe de Jong,


Thuy Nguyen
Thuy Nguyen

Supervisory Team

Abe de Jong
Professor of Corporate Finance and Corporate Governance
  • Promotor
Mathijs van Dijk
Endowed Professor of Business Administration, with particular reference to Financial Markets
  • Copromotor

Committee Members

Robert Lensink
Peter Roosenboom
Professor of Entrepreneurial Finance and Private Equity