Impact of dividend policy on corporate value: Experiment in Vietnam

Abstract

The paper examines the impact of dividend policy on corporate value. Data collection is the result of listed companies on the Vietnamese stock market in the period of 2006-2017 with 2,278 observations. Using the general least square (GLS) approach, the authors have identified three factors that have a positive and significant impact on corporate value: dividend payout, profitability, and corporate sizes; and one factor that has a negative impact on corporate value is the degree of financial leverage. The study found that dividend policy has a significant impact on the corporate value of companies that implement a higher dividend payout policy. Conversely, firms that do not pay dividends or pay low dividends do not experience a significant impact of dividend policy on corporate value. The results of the study will be meaningful for businesses on dividend policy implementation.

The Effects of Behavioral Foundations and Business Strategy on Corporate Dividend Policy

“…Although our study focuses on US firms, it is valuable for further research to compare the situation in European, Asian conditions. The characteristics of each country play a role in the management philosophy and operating style of a firm ( Lu et al, 2020 ; Dang et al, 2021 ). Furthermore, the influence of stakeholders’ power on dividend policy is also an important issue.…”

Influences of Dividend Policy on Performance Indicators in Enhancing Firm Performance Growth of Listed Non-Financial Companies on the Ghana Stock Exchange

“…Dividend policy is one of the financial variables that received numerous financial analysts and academia attention. In spite of the plethora of findings on the impact of a firm's dividend policy on its future financial performance, extant literature inconclusive with the results churned (Mamun, Hoque & Mamun, 2013;Dang, Vu, Ngo, & Hoang, 2021;Nguyen, Pham, Doan, Ta, Nguyen, & Truong, 2021). This, according to Frankfurter whose argument supports Black's dividend dilemma assertions (Frankfurter, 1999) and which remains an issue of prime concern, it is because upon all the comprehensive research on dividend policy, corporate managers and financial analysts still face the dividend conundrum with pieces of information that does not seem to have standardized fit.…”

“…The primary interest of the contemporary investor is periodic cash flow and capital growth of the investment. This makes dividends a critical consideration for stock investors (Nissim & Ziv, 2001) as it determines the net wealth of the investor (Lintner, 1956;Dang et al, 2021). In this view, the decision to pay or not to pay dividend is key communication management makes to the firm's equity investors.…”

“…Payment of dividends is a piece of welcome news to shareholders, but the information or the policy communicates much about the firm's profitability and signals to analyst and prospective investors what the firm's future prospects look like. This is important because the level of dividend influences the market performance of the corporation's stock (Mamun, Hoque & Mamun, 2013;Dang et al, 2021), and hence the value of investment (Lintner, 1956).…”

“…Researchers are now looking at the emerging economies and verify the applicability of the existing theories in these nascent economies. Arnott & Asness, Farsio et al, and Nissim & Ziv conducted their studies in developing countries (Arnott & Asness, 2003;Farsio, Geary & Moser, 2004;Nissim & Ziv, 2001;Dang et al, 2021). Similarly, Mawutor and Kemebradikemor studied the dividend policy of banks listed on the Ghana Stock Exchange (GHSE) and pronounced a positive relationship between dividend payment and bank performance (see Mawutor & Kemebradikemor, 2015;Nguyen et al, 2021).…”