The effect of Intellectual Capital on Cost of Debt: The moderating role of bankruptcy risks, ownership structure - The empirical evidence in Vietnam

Abstract

Intellectual Capital (IC) has been referred to as an emerging force to improve corporate competitive advantages in recent years. Given the benefits brought about by IC development, this research aims at exploring whether IC is a driver of firms’ cost of debt (COD). To the author’s knowledge, there has been no previous article researching in the effect of IC on COD with the moderation role of bankruptcy risks and ownership structure in the Vietnamese market. This research uses quantitative methods on a dataset containing 561 Vietnamese listed firms on the Ho Chi Minh City Stock Exchange and Ha Noi Stock Exchange during the period from 2008 to 2022. The regression results show a negative association between IC and COD, indicating that a higher IC leads to a lower COD in Vietnamese listed firms. This result shows that higher IC can be a source of competitive advantages and risk reduction, leading to higher credibility and decreasing COD as a result. Besides, state ownership positively moderates the relationship between IC and COD. The main managerial implications are that investing in IC is crucial to reduce COD.