The Impact of Financial Leverage on Financial Performance: Evidence from Listed Real Estate Companies in Vietnam

This study investigates the impact of financial leverage on the financial performance of real estate companies listed on the Vietnamese stock exchange. The real estate sector is characterized by high capital intensity and long project cycles, making it particularly sensitive to debt utilization and financial structure. Using panel data from 55 listed real estate firms over the period 2013–2023, the study employs the Feasible Generalized Least Squares (FGLS) method to address issues of heteroskedasticity and cross-sectional correlation. The results reveal that financial leverage has a statistically significant and positive impact on return on equity (ROE), indicating that well-managed debt can enhance firm profitability. Revenue growth also shows a positive influence, while the ratio of tangible fixed assets negatively affects ROE. In contrast, firm size and equity ratio are not statistically significant. The findings suggest that effective leverage strategies and efficient asset utilization are essential for improving financial performance in Vietnam’s real estate industry. The study provides important implications for corporate managers, investors, and policymakers in optimizing capital structure and enhancing financial sustainability.