IMPACT OF DIVIDEND POLICY ON MARKET PRICE OF VIETNAMESE LISTED COMPANIES FROM 2010 TO 2017
DOI:
https://doi.org/10.37569/DalatUniversity.9.1.529(2019)Keywords:
Agency theory, Dividend policy, Free cash flow, Vietnam.Abstract
Using a sample of 133 listed firms on the Hochiminh Stock Exchange for the period from 2010 to 2017, this research finds evidence indicating that dividend policy does not affect a firm’s value. A robust test with a dynamic model using the System-GMM method confirms the results. The research results support the hypothesis that in less-developed financial markets, such as those in Vietnam, positive effects of paying dividends, as suggested by existing theories in finance, tend to be neutralized by the costs that firms have to endure due to insufficient cash. This might partially explain why dividend policy does not affect a firm’s value in Vietnam.Downloads
References
Aharony, J., & Swary, I. (1980). Quarterly dividend and earnings announcements and stockholders' returns: An empirical analysis. Journal of Finance, 35, 1-12.
Al-Malkawi, H. N., Rafferty, M., & Pillai, R. (2010). Dividend policy: A review of theories and empirical evidence. International Bulletin of Business Administration, 9, 171-200.
Allen, D. E., & Rachim, V. S. (1996). Dividend policy and stock price volatility: Australian evidence. Applied Financial Economics, 6(2), 175-188.
Allen, F., Bernardo, A. E., & Welch, I. (2000). A theory of dividends based on tax clienteles. Journal of Finance, 55, 2499-2536.
Arellano, M., & Bover, O. (1995). Another look at the instrumental variable estimation of error-component models. Journal of Econometrics, 68, 29-52.
Asquith, P., & Mullins, D. W. J. (1983). The impact of initiating dividend payments on shareholders' wealth. Journal of Business, 56, 77-96.
Baker, H. K., & Weigand, R. (2015). Corporate dividend policy revisited. Managerial Finance, 41(2), 126-144.
Baskin, J. (1989). Dividend policy and the volatility of common stocks. Journal of Portfolio Management, 15, 19-25.
Benartzi, S., Michaely, R., & Thaler, R. H. (1997). Do changes in dividends signal the future or the past? Journal of Finance, 52, 1007-1034.
Bhattacharya, S. (1979). Imperfect information, dividend policy, and "the bird in the hand" fallacy. Bell Journal of Economics, 10, 259-270.
Bhattacharyya, N. (2007). Dividend policy: A review. Managerial Finance, 33(1), 4-13.
Black, F., & Scholes, M. (1974). The effects of dividend policy on common stock prices and returns. Journal of Financial Economics, 2, 1-22.
Blundell, R. W., & Bond, S. R. (1998). Initial conditions and moment restrictions in dynamic panel data model. Journal of Econometrics, 87, 115-143.
Brennan, M. J. (1970). Taxes, market valuation, and corporate financial policy. National Tax Journal, 23, 417-427.
Chen, Z., Cheung, Y. L., Stouraitis, A., & Wong, A. W. S. (2005). Ownership concentration, firm performance, and dividend policy in Hong Kong. Pacific-Basin Finance Journal, 13(4), 431-449.
Đặng, T. Q. A., & Phạm, Y. N. (2015). Ảnh hưởng của chính sách cổ tức đến biến động giá cổ phiếu của các công ty niêm yết trên Thị trường chứng khoán Việt Nam. Tạp chí Phát triển và Hội nhập, 26(36), 60-65.
de Angelo, H., de Angelo, L., & Skinner, D. J. (1996). Reversal of fortune: Dividend signalling and the disappearance of sustained earnings growth. Journal of Financial Economics, 40, 341-371.
Denis, D. J., & Osobov, I. (2008). Why do firms pay dividends? International evidence on the determinants of dividend policy. Journal of Financial Economics, 89, 62-82.
Diamond, J. J. (1967). Earnings distribution and the valuation of shares: Some recent evidence. Journal of Financial and Quantitative Analysis, 2, 15-30.
Do, Q. H., & Luu, V. H. (2018). Impacts of dividend announcement on stock price: An empirical study of the Vietnam stock market. Journal of Business and Management Science, 6(2), 59-69.
Easterbrook, F. H. (1984). Two agency costs explanations of dividends. American Economic Review, 74, 650-659.
Elton, E. J., & Gruber, M. J. (1970). Marginal stockholder tax rates and the clientele effect. Review of Economics and Statistics., 52, 68-74.
Gordon, M. J. (1963). Optimal investment and financing policy. Journal of Finance, 18, 264-272.
IMF. (2017). IMF country report No. 17/191: Vietnam, selected issues. Retrieved from https://www.imf.org/~/media/Files/Publications/CR/2017/cr17191.ashx.
Jensen, M. C. (1986). Agency costs of free cash flow, corporate finance, and takeovers. American Economic Review, 76, 323-329.
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs, and ownership structure. Journal of Financial Economics, 3, 305-360.
Kalay, A., & Michaely, R. (2000). Dividends and taxes: A reexamination. Financial Management, 29, 55-75.
Koch, P. D., & Shenoy, C. (1999). The information content of dividend and capital structure policies. Financial Management, 28, 16-35.
la Porta, R., de-Silanes, L. F., Shleifer, A., & Vishny, R. (2000). Investor protection and corporate governance. Journal of Financial Economics, 58(1-2), 3-27.
Lang, L. H. P., & Litzenberger, R. H. (1989). Dividend announcements: Cash flow signalling vs. free cash flow hypothesis. Journal of Financial Economics, 24, 181-191.
Lintner, J. (1956). Distribution of incomes of corporations among dividends, retained earnings, and taxes. American Economic Review, 46, 97-113.
Litzenberger, R. H., & Ramaswamy, K. (1979). The effect of personal taxes and dividends on capital asset prices. Journal of Financial Economics, 7, 163-195.
Litzenberger, R. H., & Ramaswamy, K. (1982). The effects of dividends on common stock prices: Tax effects or information effects? Journal of Finance, 37, 429-443.
Mai, V. N., & Vuong, Q. D. (2017). Impact of dividend policy on the valuation of company shares. International Journal of Innovative Science, Engineering & Technology, 4, 33-48.
Miller, M., & Modigliani, F. (1961). Dividend policy, growth and the valuation of shares. Journal of Business, 34, 411-433.
Miller, M. H., & Scholes, M. S. (1982). Dividend and taxes: Some empirical evidence. Journal of Political Economy, 90, 1118-1141.
Morgan, G., & Thomas, S. (1998). Taxes, dividend yields, and returns in the UK equity market. Journal of Banking and Finance, 22, 405-423.
Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187-221.
Nguyen, A., & Nguyen, T. (2018a). Free cash flow and corporate profitability in emerging economies: Empirical evidence from Vietnam. Economics Bulletin, 38(1), 211-220.
Nguyen, A., & Nguyen, T. (2018b). Working capital management and corporate profitability: Empirical evidence from Vietnam. Foundations of Management, 10, 195-206.
Nguyen, K. T., Le, V. T., Duong, T. T. A., & Hoang, T. N. (2013). Determinants of dividend payments of non-financial listed companies in Hochiminh Stock Exchange. VNU Journal of Economics and Business, 29(5E), 16-33.
Nguyen, T., Locke, S., & Reddy, K. (2015). Ownership concentration and corporate performance from a dynamic perspective: Does national governance quality matter? International Review of Financial Analysis, 41, 148-161.
O'Brien, R. M. (2007). A caution regarding rules of thumb for variance inflation factors. Quality & Quantity, 41, 673-690.
Poterba, J. M., & Summers, L. H. (1984). New evidence that taxes affect the valuation of dividends. Journal of Finance, 39, 1397-1415.
Rozeff, M. S. (1982). Growth, beta, and agency costs as determinants of dividend payout ratios. The Journal of Financial Research, 5(3), 249-259.
Short, H., Zhang, H., & Keasey, K. (2002). The link between dividend policy and institutional ownership. Journal of Corporate Finance, 8, 105-122.
UBCKNN. (2017). Báo cáo thường niên 2017. Được truy lục từ http://www.ssc.gov.vn/ubck/faces/oracle/webcenter/portalapp/pages/vi/aptcnoidungchitiet.jspxid=1301&_afrLoop=41412593914458794&_afrWindowMode=0#%40%3F_afrLoo%3D41412593914458794%26id%3D1301%26_afrWindowMode%3D0%26_adf.ctrl-state%3Dl8kbextfw_243.
Walter, J. E. (1963). Dividend policy: Its influence on the value of the enterprise. Journal of Finance, 18, 280-291.
Wintoki, M. B., Linck, J. S., & Netter, J. M. (2012). Endogeneity and the dynamics of internal corporate governance. Journal of Financial Economics, 105(3), 581-606.
Wooldridge, J. M. (2002). Econometric analysis of cross section and panel data. Cambridge, UK: MIT Press.
Downloads
Published
Volume and Issues
Section
Copyright & License
Copyright (c) 2019 Hoàng Mai Phương, Nguyễn Thanh Hồng Ân.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
How to Cite
