Investment and Financial Performance: The Moderating Role of Social Capital Investment
Abstract
This study examines the relationship between corporate investment and financial performance among listed construction firms in Vietnam, with a particular attention to the moderating role of sector-level social capital investment. Using a panel data for 93 listed construction companies over the period 2011-2023, combined with national data on social capital investment in the construction sector, the study applies generalized least squares (GLS) estimation to assess both market-based and accounting-based performance outcomes. The results indicate that firm-level investment is positively associated with Tobin’s Q and return on assets, with stronger effects observed for larger firms, reflecting their superior access to resources and capacity to absorb investment risks. However, higher levels of sectoral social capital investment significantly weaken this positive relationship. This negative moderation effect is consistent with the crowding-out mechanism, whereby intensified sector-wide investment heightens competition for scarce inputs, increases production costs, and reduces the marginal returns to firm-specific investment. By integrating firm-level behavior with sectoral investment dynamics, the study contributes to the literature on investment efficiency in capital-intensive industries and emerging markets. The findings also offer policy-relevant insights, emphasizing the importance of coordinating public and private investment strategies to avoid resource congestion and enhance long-term firm performance.
References
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Ajibola, A. (2025). Tobin-Q valuation methodology of the impact of corporate governance structure on organizational performance: Evidence from Nigeria’s banking sector. BRICS Journal of Economics, 6(1), 35–52. https://doi.org/10.3897/brics-econ.6.e134961
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Badruzaman, J., Ridho, A., & Saputra, J. (2019). Analysis of asset growth and profit growth through supply chain management toward company value. International Journal of Supply Chain Management, 8(5), 336–348.
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Barro, R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, 98(5), S103–S125. http://www.nber.org/papers/w2588.pdf
Bartolini, S., Piekalkiewicz, M., Sarracino, F., & Slater, G. (2023). The moderation effect of social capital in the relationship between own income, social comparisons, and subjective well-being: Evidence from four international datasets. PLOS ONE, 18(12), e0288455. https://doi.org/10.1371/journal.pone.0288455
Batten, J. A., & Vo, X. V. (2018). Liquidity and firm value in an emerging market. Singapore Economic Review, 64(2), 365–376. https://doi.org/10.1142/S0217590817470063
Berk, J. B., & DeMarzo, P. (2020). Corporate finance (5th global ed.). Pearson.
Bond, S. R., Klemm, A., Newton-Smith, R., Syed, M., & Vlieghe, G. W. (2011). The roles of expected profitability, Tobin’s Q, and cash flow in econometric models of company investment. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.641241
Buiter, W. H. (1977). “Crowding out” and the effectiveness of fiscal policy. Journal of Public Economics, 7(3), 309–328. https://doi.org/10.1016/0047-2727(77)90052-4
Çam, İ., Önal Tuğrul, N., Şimşek, K., Karaçuha, K., Karaçuha, E., & Özer, G. (2024). The effects of the investment decisions of telecommunications firms on their financial performance during the COVID-19 pandemic. Empirical Economics, 66(5), 2007–2047. https://doi.org/10.1007/s00181-023-02525-4
Chung, K. H., & Pruitt, S. W. (1994). A simple approximation of Tobin’s Q. Financial Management, 23(3), 70–74. https://doi.org/10.2307/3665623
Cordis, A. S., & Kirby, C. (2017). Capital expenditures and firm performance: Evidence from a cross-sectional analysis of stock returns. Accounting & Finance, 57, 1019–1042. https://doi.org/10.1111/acfi.12193
Credence Research. (2024). Vietnam commercial building construction market. https://www.credenceresearch.com/report/vietnam-commercial-building-construction-market
Dybvig, P. H., & Warachka, M. (2012). Tobin’s Q does not measure performance: Theory, empirics, and alternative measures. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1562444
Egbunike, C. F., & Okerekeoti, C. U. (2018). Macroeconomic factors, firm characteristics and financial performance: A study of selected quoted manufacturing firms in Nigeria. Asian Journal of Accounting Research, 3(2), 142–168. https://doi.org/10.1108/AJAR-09-2018-0029
Farooq, M., Noor, A., & Ali, S. (2022). Corporate governance and firm performance: Empirical evidence from Pakistan. Corporate Governance: The International Journal of Business in Society, 22(1), 42–66. https://doi.org/10.1108/CG-07-2020-0286
Farooq, U., Tabash, M. I., Al-Naimi, A. A., & Drachal, K. (2022). Corporate investment decision: A review of literature. Journal of Risk and Financial Management, 15(12), 611. https://doi.org/10.3390/jrfm15120611
Francois, J. N., Konte, M., & Ruch, F. U. (2024). “Crowding in” effect of public investment on private investment revisited. World Bank Policy Research Working Paper No. 10881. http://hdl.handle.net/10986/42097
Gao, D., Li, S., & Zhou, Y. (2025). Investment efficiency, ESG performance, and corporate performance: Evidence from Chinese listed enterprises. Corporate Management Studies, 19(2), 567–599. https://doi.org/10.1108/CMS-06-2022-0210
Gill, H. (2022). Relationship between liquidity and profitability: An analysis of Indian cement companies. Journal of Management Research and Analysis, 9(2), 61–66.
Gjini, A., & Kukeli, A. (2012). Crowding-out effect of public investment on private investment: An empirical investigation. Journal of Business & Economics Research, 10(5), 269–276. https://doi.org/10.19030/jber.v10i5.6978
Government of Vietnam. (2021). Decree No. 10/2021/ND-CP on the management of construction investment costs. https://vanban.chinhphu.vn/default.aspx?pageid=27160&docid=202663
Grozdic, V., Maric, B., Radišić, M., Šebestová, J., & Lis, M. (2020). Capital investments and manufacturing firms’ performance: Panel-data analysis. Sustainability, 12(4), 1689. https://doi.org/10.3390/su12041689
Gugler, K., Mueller, D. C., & Yurtoglu, B. B. (2004). Marginal q, Tobin’s q, cash flow, and investment. Southern Economic Journal, 70(3), 512–531. https://doi.org/10.1002/j.2325-8012.2004.tb00586.x
Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). McGraw-Hill.
Hasnawati, S. (2020). Size, return, and public company performance: A study of small and large companies on the Indonesia Stock Exchange during three economic periods. Academy of Accounting and Financial Studies Journal, 24(2).
Higgins, R. C., Koski, J., & Mitton, T. (2023). Analysis for financial management (13th ed.). McGraw-Hill Education.
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323–329. http://www.jstor.org/stable/1818789
Jorgenson, D. W. (1963). Capital theory and investment behavior. American Economic Review, 53(2), 247–259. http://www.jstor.org/stable/1823868
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2022). Intermediate accounting (18th ed.). Wiley.
Lin, Y. (2022). Fixed asset investment and enterprise performance based on the moderating effects of the nature of equity. BCP Business & Management, 21, 151–160. https://doi.org/10.54691/bcpbm.v21i.1188
Maggina, A., & Tsaklanganos, A. (2012). Asset growth and firm performance: Evidence from Greece. International Journal of Business and Finance Research, 6(2), 113–124.
Mazza, I. (2020). Political economy. In Handbook of cultural economics (3rd ed., pp. 430–440). Edward Elgar. https://doi.org/10.4337/9781788975803.00054
Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53(3), 433–443. http://www.jstor.org/stable/1809167
Mordor Intelligence. (2025). Vietnam construction industry – size & share analysis (2025–2030). https://www.marketresearch.com/Mordor-Intelligence-LLP-v4018/Construction-c105/1.html
Okwo, I. M., & Okelue, U. D. (2012). Investment in fixed assets and firm profitability: Evidence from the Nigerian brewery industry. European Journal of Business and Management, 4(20), 10–18.
Pandey, I. M. (2010). Financial management (10th ed.). Vikas Publishing House.
Phan, D. N., & Phan, T. A. D. (2013). Determinants of corporate investment decisions: The case of Vietnam. Journal of Economics and Development, 15(1), 32–48.
Saif, M., Islam, U., Meo, M. S., & Usman, M. (2020). The relationship between corporate investment decision and firm performance: Moderating role of cash flows. Journal of Public Affairs. https://doi.org/10.1002/pa.2445
Salehi, M., Zimon, G., Arianpoor, A., & Gholezoo, F. E. (2022). The impact of investment efficiency on firm value and moderating role of institutional ownership and board independence. Journal of Risk and Financial Management, 15(4), 170. https://doi.org/10.3390/jrfm15040170
Scherer, F. M., & Ross, D. (1990). Industrial market structure and economic performance (3rd ed.). Houghton Mifflin.
Cevik, S., Fan, A., & Naik, S. (2024). Is inflation good for business? The firm-level impact of inflation shocks in the Baltics, 1997–2021. IMF Working Papers, 2024(043). https://doi.org/10.5089/9798400269059.001
Smulowitz, S., Becerra, M., & Mayo, M. (2019). Racial diversity and its asymmetry within and across hierarchical levels: The effects on financial performance. Human Relations, 72(10), 1671–1696. https://doi.org/10.1177/0018726718812602
Statista. (2023). Construction industry in Vietnam. https://www.statista.com
Ajibola, A. (2025). Tobin-Q valuation methodology of the impact of corporate governance structure on organizational performance: Evidence from Nigeria’s banking sector. BRICS Journal of Economics, 6(1), 35–52. https://doi.org/10.3897/brics-econ.6.e134961
Al-Dwiry, M., Al-Basha, T., & Amira, W. (2021). The impact of selective financial determinants on Tobin’s Q of mining and extraction industries companies listed in Amman Stock Exchange. Academy of Strategic Management Journal, 20(6S). https://www.abacademies.org/articles/the-impact-of-selective-financial-determinants-on-tobins-q-of-mining-and-extraction-industries-companies-listed-in-amman-stock-exc-13930.html
Aydoğmuş, M., Gülay, G., & Ergun, K. (2022). Impact of ESG performance on firm value and profitability. Borsa Istanbul Review, 22(Suppl.), S119–S127. https://doi.org/10.1016/j.bir.2022.11.006
Badruzaman, J., Ridho, A., & Saputra, J. (2019). Analysis of asset growth and profit growth through supply chain management toward company value. International Journal of Supply Chain Management, 8(5), 336–348.
Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of Management, 17(1), 99–120. https://doi.org/10.1177/014920639101700108
Barro, R. J. (1990). Government spending in a simple model of endogenous growth. Journal of Political Economy, 98(5), S103–S125. http://www.nber.org/papers/w2588.pdf
Bartolini, S., Piekalkiewicz, M., Sarracino, F., & Slater, G. (2023). The moderation effect of social capital in the relationship between own income, social comparisons, and subjective well-being: Evidence from four international datasets. PLOS ONE, 18(12), e0288455. https://doi.org/10.1371/journal.pone.0288455
Batten, J. A., & Vo, X. V. (2018). Liquidity and firm value in an emerging market. Singapore Economic Review, 64(2), 365–376. https://doi.org/10.1142/S0217590817470063
Berk, J. B., & DeMarzo, P. (2020). Corporate finance (5th global ed.). Pearson.
Bond, S. R., Klemm, A., Newton-Smith, R., Syed, M., & Vlieghe, G. W. (2011). The roles of expected profitability, Tobin’s Q, and cash flow in econometric models of company investment. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.641241
Buiter, W. H. (1977). “Crowding out” and the effectiveness of fiscal policy. Journal of Public Economics, 7(3), 309–328. https://doi.org/10.1016/0047-2727(77)90052-4
Çam, İ., Önal Tuğrul, N., Şimşek, K., Karaçuha, K., Karaçuha, E., & Özer, G. (2024). The effects of the investment decisions of telecommunications firms on their financial performance during the COVID-19 pandemic. Empirical Economics, 66(5), 2007–2047. https://doi.org/10.1007/s00181-023-02525-4
Chung, K. H., & Pruitt, S. W. (1994). A simple approximation of Tobin’s Q. Financial Management, 23(3), 70–74. https://doi.org/10.2307/3665623
Cordis, A. S., & Kirby, C. (2017). Capital expenditures and firm performance: Evidence from a cross-sectional analysis of stock returns. Accounting & Finance, 57, 1019–1042. https://doi.org/10.1111/acfi.12193
Credence Research. (2024). Vietnam commercial building construction market. https://www.credenceresearch.com/report/vietnam-commercial-building-construction-market
Dybvig, P. H., & Warachka, M. (2012). Tobin’s Q does not measure performance: Theory, empirics, and alternative measures. SSRN Electronic Journal. https://doi.org/10.2139/ssrn.1562444
Egbunike, C. F., & Okerekeoti, C. U. (2018). Macroeconomic factors, firm characteristics and financial performance: A study of selected quoted manufacturing firms in Nigeria. Asian Journal of Accounting Research, 3(2), 142–168. https://doi.org/10.1108/AJAR-09-2018-0029
Farooq, M., Noor, A., & Ali, S. (2022). Corporate governance and firm performance: Empirical evidence from Pakistan. Corporate Governance: The International Journal of Business in Society, 22(1), 42–66. https://doi.org/10.1108/CG-07-2020-0286
Farooq, U., Tabash, M. I., Al-Naimi, A. A., & Drachal, K. (2022). Corporate investment decision: A review of literature. Journal of Risk and Financial Management, 15(12), 611. https://doi.org/10.3390/jrfm15120611
Francois, J. N., Konte, M., & Ruch, F. U. (2024). “Crowding in” effect of public investment on private investment revisited. World Bank Policy Research Working Paper No. 10881. http://hdl.handle.net/10986/42097
Gao, D., Li, S., & Zhou, Y. (2025). Investment efficiency, ESG performance, and corporate performance: Evidence from Chinese listed enterprises. Corporate Management Studies, 19(2), 567–599. https://doi.org/10.1108/CMS-06-2022-0210
Gill, H. (2022). Relationship between liquidity and profitability: An analysis of Indian cement companies. Journal of Management Research and Analysis, 9(2), 61–66.
Gjini, A., & Kukeli, A. (2012). Crowding-out effect of public investment on private investment: An empirical investigation. Journal of Business & Economics Research, 10(5), 269–276. https://doi.org/10.19030/jber.v10i5.6978
Government of Vietnam. (2021). Decree No. 10/2021/ND-CP on the management of construction investment costs. https://vanban.chinhphu.vn/default.aspx?pageid=27160&docid=202663
Grozdic, V., Maric, B., Radišić, M., Šebestová, J., & Lis, M. (2020). Capital investments and manufacturing firms’ performance: Panel-data analysis. Sustainability, 12(4), 1689. https://doi.org/10.3390/su12041689
Gugler, K., Mueller, D. C., & Yurtoglu, B. B. (2004). Marginal q, Tobin’s q, cash flow, and investment. Southern Economic Journal, 70(3), 512–531. https://doi.org/10.1002/j.2325-8012.2004.tb00586.x
Gujarati, D. N., & Porter, D. C. (2009). Basic econometrics (5th ed.). McGraw-Hill.
Hasnawati, S. (2020). Size, return, and public company performance: A study of small and large companies on the Indonesia Stock Exchange during three economic periods. Academy of Accounting and Financial Studies Journal, 24(2).
Higgins, R. C., Koski, J., & Mitton, T. (2023). Analysis for financial management (13th ed.). McGraw-Hill Education.
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76(2), 323–329. http://www.jstor.org/stable/1818789
Jorgenson, D. W. (1963). Capital theory and investment behavior. American Economic Review, 53(2), 247–259. http://www.jstor.org/stable/1823868
Kieso, D. E., Weygandt, J. J., & Warfield, T. D. (2022). Intermediate accounting (18th ed.). Wiley.
Lin, Y. (2022). Fixed asset investment and enterprise performance based on the moderating effects of the nature of equity. BCP Business & Management, 21, 151–160. https://doi.org/10.54691/bcpbm.v21i.1188
Maggina, A., & Tsaklanganos, A. (2012). Asset growth and firm performance: Evidence from Greece. International Journal of Business and Finance Research, 6(2), 113–124.
Mazza, I. (2020). Political economy. In Handbook of cultural economics (3rd ed., pp. 430–440). Edward Elgar. https://doi.org/10.4337/9781788975803.00054
Modigliani, F., & Miller, M. H. (1963). Corporate income taxes and the cost of capital: A correction. American Economic Review, 53(3), 433–443. http://www.jstor.org/stable/1809167
Mordor Intelligence. (2025). Vietnam construction industry – size & share analysis (2025–2030). https://www.marketresearch.com/Mordor-Intelligence-LLP-v4018/Construction-c105/1.html
Okwo, I. M., & Okelue, U. D. (2012). Investment in fixed assets and firm profitability: Evidence from the Nigerian brewery industry. European Journal of Business and Management, 4(20), 10–18.
Pandey, I. M. (2010). Financial management (10th ed.). Vikas Publishing House.
Phan, D. N., & Phan, T. A. D. (2013). Determinants of corporate investment decisions: The case of Vietnam. Journal of Economics and Development, 15(1), 32–48.
Saif, M., Islam, U., Meo, M. S., & Usman, M. (2020). The relationship between corporate investment decision and firm performance: Moderating role of cash flows. Journal of Public Affairs. https://doi.org/10.1002/pa.2445
Salehi, M., Zimon, G., Arianpoor, A., & Gholezoo, F. E. (2022). The impact of investment efficiency on firm value and moderating role of institutional ownership and board independence. Journal of Risk and Financial Management, 15(4), 170. https://doi.org/10.3390/jrfm15040170
Scherer, F. M., & Ross, D. (1990). Industrial market structure and economic performance (3rd ed.). Houghton Mifflin.
Cevik, S., Fan, A., & Naik, S. (2024). Is inflation good for business? The firm-level impact of inflation shocks in the Baltics, 1997–2021. IMF Working Papers, 2024(043). https://doi.org/10.5089/9798400269059.001
Smulowitz, S., Becerra, M., & Mayo, M. (2019). Racial diversity and its asymmetry within and across hierarchical levels: The effects on financial performance. Human Relations, 72(10), 1671–1696. https://doi.org/10.1177/0018726718812602
Statista. (2023). Construction industry in Vietnam. https://www.statista.com
Published
2026-06-30
How to Cite
LINH, Nguyen Ngoc Khanh; HA, Nguyen Thu; THAO, Do Phuong.
Investment and Financial Performance: The Moderating Role of Social Capital Investment.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 17, n. 2, p. 305 - 321, june 2026.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/9509>. Date accessed: 02 july 2026.
doi: https://doi.org/10.14505/tpref.v17.2(38).02.
Section
Articles
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