The effects of corporate restructuring strategies and industry uncertainty on firmperformance: Evidence from listed non-financial firms in Vietnam

Abstract

Purpose - This study examines how three defensive restructuring strategies (asset retrenchment, debt reduction, and cost retrenchment) affect the performance of listed non-financial firms in Vietnam under industry uncertainty. The study is motivated by the increasing prevalence of corporate restructuring in Vietnam and the need to clarify which restructuring strategy is more effective under different industry uncertainty conditions.Design/methodology/approach - The study uses an unbalanced panel of 484 listed non-financial firms with 6,862 firm-year observations on HOSE and HNX during 2010–2024. The system GMM estimator is employed to address dynamic performance persistence and potential endogeneity. Industry uncertainty is measured by a composite index constructed through principal component analysis from the cross-sectional dispersion of firm-level shocks in sales, profits, and operating cash flows within each industry-year.Findings - The results show that debt reduction improves ROA, whereas asset retrenchment reduces firm performance. Cost retrenchment has mixed effects, indicating that cost cutting does not always translate into better operating outcomes. The benefits of restructuring are clearer under low industry uncertainty, where debt reduction performs best. Economically, a one-percentage-point increase in debt reduction is associated with an approximately 0.739 percentage-point increase in ROA under low industry uncertainty.Originality/value - This study contributes to the restructuring and uncertainty literature by distinguishing three defensive restructuring channels and examining their performance effects under different industry uncertainty states. It proposes a composite uncertainty measure tailored to Vietnamese listed firms.Practical implications - Managers should not treat restructuring as a uniform solution. Asset retrenchment should be used cautiously to avoid weakening revenue-generating resources, debt reduction should be prioritized when firms face financial pressure, and cost retrenchment should be implemented selectively to preserve human resources.Social implications - A better understanding of industry uncertainty can help firms, investors, and regulators assess the timing and intensity of restructuring decisions, thereby supporting more stable corporate adjustment and resource allocation in emerging markets.