The impact of financial reporting quality on corporate dividend policy - Experimental research on Ho Chi Minh City stock exchange

Abstract

The purpose related to this study is to examine the impact of financial reporting quality on corporate dividend policy. The data has been extracted from non-financial companies listed on the Ho Chi Minh City Stock Exchange. This study has executed the system generalized method of moments (GMM) for checking the nexus among the constructs. The results revealed that financial reporting quality has a positive association with dividend policy. The decision to pay dividends serves as a signal to stakeholders about the quality of financial statements as well as the company's prospects, or more specifically, the company's dividend policy can be considered a in indicators of the quality of an entity's profitability. Therefore, managers need to consider to maintain a stable cash dividend payment policy, thereby contributing to the company's strengthening of investors' confidence, facilitating the mobilization of share capital and increase the market value of the business. Besides, a number of factors have a positive relationship with the corporate dividend policy such as: profitability ratio, ratio between market value to book value of total assets, and cash flow from business activities; another variables: firm size, financial leverage, and cash holdings are negatively related to dividend policy. These outcomes are suitable for the policymakers, people who are creating and using accounting to make appropriate economic decisions.