Exploring the Determinants of Company’s Dividend Payout Policy in Vietnamese Stock Market

Abstract

Abstract Vietnamese stock market exists in one of the most dynamic emerging countries in East Asia. As expected, stock market has worked well to push up Vietnamese economy. Due to the information asymmetry, investors often rely on the dividend payment as an indicator to predict the company’s future prospects. Dividend payout policy is a significant concern of financial managers’ in shareholding firms and outside investors’ decision-making. The aim of dividend payout policy is to allocate retained earnings for reinvestment and dividends for shareholders. This research investigates the determinants of dividend payout policy in Ho Chi Minh Stock Exchange in Vietnam, an emerging stock market that was officially established in July, 2000. Additionally, this research evaluates whether the factors affect company’s dividend policy such as profitability, firm size, financial leverage and growth rate, etc. This research data is collected from enterprises listed on the Vietnam stock market in the period of 2014-2018 with 756 observations, and analyzed by Ordinary Least Square model and Fixed Effect model and Random Effect model. Based on the Hausman Specification Test result, Fixed Effect model is the most consistent model of examining the factors affecting the dividend payout policy. JEL Classification: C22, E27, G15. Keywords: Dividend payout policy, Vietnamese stock market, Ordinary least square, Fixed effect model.