Firm performance under the interactive moderation of capital structure, dividend policy and state ownership

UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM ERASMUS UNVERSITY ROTTERDAM INSTITUTE OF SOCIAL STUDIES THE NETHERLANDS VIETNAM – THE NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS FIRM PERFORMANCE UNDER THE INTERACTIVE MODERATION OF CAPITAL STRUCTURE, DIVIDEND POLICY, AND STATE OWNERSHIP BY TRAN LE KHANG MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY, DECEMBER 2017 UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CIT THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS FIRM PERFORMANCE UNDER THE INTERACTIVE MODERATION OF CAPITAL STRUCTURE, DIVIDEND POLICY, AND STATE OWNERSHIP A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By TRAN LE KHANG Academic Supervisor: DR NGUYEN VU HONG THAI HO CHI MINH CITY, DECEMBER 2017 DECLARATION I declare that the thesis entitled “Firm performance under the interactive moderation of capital structure, dividend policy, and state ownership” has been solely conducted by myself under the supervision and guidance of Dr Nguyen Vu Hong Thai from RMIT University I commit that my interpretations throughout the research are completely based on my academic knowledge and the understanding of previous studies presented in the reference list and that this paper has not been previously submitted to any graduate program for the degree or published in any sources I shoulder all the responsibility for the ideas, contents, and results of this research TRAN LE KHANG i|Page ACKNOWLEDGEMENT To have such a successful thesis, I would like to express my deep gratitude to my supervisor, Dr Nguyen Vu Hong Thai, for his dedicated guidance, meticulous care, enthusiastic support during the process of doing my thesis His insightful knowledge, fruitful comments, and precious suggestions make some critical contributions to the completion of my research He has supported and guided me since the beginning of the process and encouraged and reminded me to follow the schedules of the program His motivation is what helps me finish my thesis in time for submission Without his guidance and encouragement, never can I bring my research to light Working with him in the process is the most memorable and enjoyable experience that I have ever had in my life Besides my supervisor, I want to give thanks to all the lecturers and the staff of Vietnam – Netherlands Program for their dedication as well as willingness to spend their priceless time aiding all students in my class I extremely appreciate my classmates, especially the members in my dear group, for the encouragement and the cooperation during the course They are sometimes the good examples for me to follow I wish that they all can graduate on time at the end of this year Last but not least, my inexpressible appreciation is dedicated to my beloved family who have sacrificed themselves for me to have all the convenience and support to successfully finish the master program ii | P a g e ABBREVIATION ADB: Asian Development Bank DGMM: Difference Generalized Method of Moment EBIT: Earnings before interests and taxes EBITDA: Earning before interests and taxes plus appreciation and amortization EBT: Earnings before taxes FEM: Fixed Effect Model GDP: Gross Domestic Product GMM: Generalized Method of Moment HNX: Hanoi Stock Exchange HOSE: Ho Chi Minh Stock Exchange MOM: Method of Moment OLS: Ordinary Least Square POEs: private-owned enterprises POLS: Pooled Ordinary Least Square REM: Random Effect Model ROA: return on assets ROE: return on equity SEDS: Socio Economic Development Strategy SGMM: System Generalized Method of Moment SMEs: small and medium enterprises SOEs: state-owned enterprises 5|Page ABSTRACT Privatization has become Vietnam’s top priority to drive the country toward the market-oriented economy as well as to improve business activities within SOEs since 1992 However, after quarter a century, the process is increasingly slowing down and is supposed not to help enhance firm performance because it is similar to “putting on a new bottle for the old wine” Such a pressing problem leads the author to take into account the interactive effects of both internal policies and state ownership on firm performance so as to clarify the moderation of firm policies to state ownership and vice versa This research hopes to contribute an important part to managers’ decisions on how to use debt and dividend policy and the government’s strategy on whether to continue pushing the privatization process among SOEs Using a sample of 663 listed Vietnamese companies on HOSE and HNX from 2008 to 2015 together with SGMM as an econometric technique to address the problem of endogeneity caused by the dynamic approach, the study demonstrates that financial leverage, dividend policy, and state ownership are negatively related to firm performance Such a negative impact can be moderated with the combination of any two variables out of the triad, meaning that a suitable decision on either debt or dividend policy can help increase profitability among SOEs Nevertheless, the negative sign of the three-variable interaction implies that SOEs should be careful and cautious when they combine these two policies in their decision-making process The marginal effects of each of the three variables show that firm performance becomes more effective if the other two variables are kept at the high – low and low – high value and gets less effective when it comes to the high – high and low – low level Key words: Firm Performance, Financial Leverage, State Ownership, Vietnam JEL Classification: G31, G35 TABLE OF CONTENTS DECLARATION i ACKNOWLEDGEMENT .ii ABBREVIATION iii ABSTRACT iv TABLE OF CONTENTS iv LIST OF TABLES vii CHAPTER 1: OVERVIEW OF RESEARCH 1.1 Vietnam’s corporate context: 1.2 Problem statements: .3 1.3 Research objectives: .6 1.4 Research questions: 1.5 The importance of the study 1.6 Structure of research: .7 CHAPTER 2: LITERATURE REVIEWS 2.1 Theoretical Reviews: 2.1.1 Agency Theory 2.1.2 Capital structure Theories: 2.1.3 Dividend payout theories: .13 2.2 Empirical Reviews: 15 2.2.1 Firm performance and financial leverage 15 2.2.2 Firm performance and dividend policy 18 2.2.3 Firm performance and state ownership: 23 2.3 Research hypotheses: 24 CHAPTER 3: DATA AND METHODOLOGY .30 3.1 Data collection: 30 3.2 Empirical model: 30 3.3 The variable definition and measurement: 31 3.3.1 Dependent variables: .31 3.3.2 Explanatory variables: 32 3.3.3 Instrumental variables: 33 3.4 Estimation method for panel data 34 3.4.1 The problem of endogeneity 34 3.4.2 Dynamic approach: .35 3.4.3 Interation terms and marginal effects: 37 CHAPTER 4: RESULTS AND DISCUSSIONS 39 4.1 Summary statistics: 39 4.1.1 Data description: 39 4.1.2 Correlation: 40 4.2 Empirical results: 42 4.3 Robustness check: 48 4.4 Marginal effects: 50 CHAPTER 6: CONCLUSION 55 6.1 Main findings: 55 6.2 Policy implications: 57 6.3 Limitations: 59 REFERENCES 60 APPENDIX 79 APPENDIX 80 LIST OF TABLES Table 4.1: Summary statistics 39 Table 4.2: Correlation Matrix 41 Table 4.3: Estimated results using SGMM 42 Table 4.4: Robustness check for different measures of the dependent variable .49 Table 4.5: Marginal effects of three main variables .51 Table A1: Xtabond2 model selection criteria 79 Table A2: Descriptions of variables .80 CHAPTER 1: OVERVIEW OF RESEARCH 1.1 Vietnam’s corporate context: Before 1986, Vietnam’s economy followed a centrally-planned regime, and almost all corporations operating in this country were only divided into two categories which are state-owned and collective enterprises However, the year 1986 is considered as a remarkable turning point in Vietnam’s development when the Congress initiated the Doi Moi Program, making a step towards the market-oriented economy with the purpose of boosting economic growth and helping Vietnam to achieve higher productivity, sufficiency, and prosperity In fact, Su et al (2016) found that Vietnam’s adoption of the economic transformation plays a key role in propelling bilateral and multilateral trade, attracting domestic and foreign investment, alleviating poverty, and ensuring human development Along with this market economic reform comes the privatization process that turned state-owned to private-owned enterprises This process is designed to heighten economic effectiveness, diversify firm owners, modify capital structure, and adjust the practice of using capital among SOEs (Tran, 2015) Starting in 1992, the government’s policy assisted this transitional economy in mitigating the ineffective operations of SOEs, encouraging POEs to develop, creating employment, and facilitating economic growth However, the transformation was conducted at a slow pace, and most of the equitized companies are small and unprofitable Moreover, the government still maintained its control over some large SOEs providing utilities and banking services This reality showed an opposite situation compared to other transitional economies in the world where privatization was rapidly proceeded (Estrin et al., 2009) The explanations for the difference are that the government was afraid of losing their control and benefits, that the evaluation of stateowned enterprises’ assets had some troubles, and that SOEs were fearful of being unable to receive preferential credits supplied by the state commercial banks as well as being imposed some budget constraints (Kornai, 1986; Truong & Ha, 1998) During the course of time, SOEs had been demonstrated to be ineffective than any type of firm ownership Although they were given a relatively large share of the government’s investment and were able to get access to preferential resources, they only contributed a small part to the increase in employment compared to POEs and virtually took advantage of their political connections to drive the economy in a way favorable to themselves Political connections are beneficial to SOEs because they are associated with advantageous protection from the legal system, easy access to loans from the 1|Page La Porta, R., Lopez-de-Silanes, F., Shleifer, A., & Vishny, R (1999) The quality of government The Journal of Law, Economics, and Organization, 15(1), 222-279 Laasch, O., & Conaway, R (2002) Enterprise restructuring in transition: A quantitative survey Journal of Economic Literature, 40(3), 739-792 Laffont, J.-J., & Tirole, J (1993) A theory of incentives in procurement and regulation: MIT press Lall, S (1976) Financial and profit performance of MNCs in developing countries: Some evidence from an Indian and Columbian sample World Development, 4(9), 713- 724 Lam, K C., Sami, H., & Zhou, H (2012) The role of cross-listing, foreign ownership and state ownership in dividend policy in an emerging market China Journal of Accounting Research, 5(3), 199-216 Le, D C (2013) Các nhân tố ảnh hưởng đến việc hoạch định cấu trúc vốn nhà quản trị tài Việt Nam PHÁT TRIỂN & HỘI NHẬP, Số 9(19), 22-28 Le, D H., Tran, M T., Nguyen, P C., & Nguyen, H A (2016) Nghiên cứu ảnh hưởng cấu trúc sở hữu nhà nước tới hiệu hoạt động doanh nghiệp xây dựng niêm yết Tạp chí Kinh tế phát triển, Số 232(10/2016), Tr.60-68 Lease, R C., John, K., Kalay, A., Loewenstein, U., & Sarig, O H (1999) Dividend Policy:: Its Impact on Firm Value OUP Catalogue Leung, S (2009) Banking and financial sector reforms in Vietnam ASEAN Economic Bulletin, 26(1), 44-57 Li, H., Meng, L., Wang, Q., & Zhou, L.-A (2008) Political connections, financing and firm performance: Evidence from Chinese private firms Journal of development economics, 87(2), 283-299 Li, H., & Zhou, L.-A (2005) Political turnover and economic performance: the incentive role of personnel control in China Journal of Public Economics, 89(9), 1743- 1762 Liao, J., & Young, M (2012) The impact of residual government ownership in privatized firms: New evidence from China Emerging Markets Review, 13(3), 338-351 Lin, J Y (2004) Lessons of China's transition from a planned economy to a market economy: Leon Koźmiński Academy of Entrepreneurship and Management Lintner, J (1956) Distribution of incomes of corporations among dividends, retained earnings, and taxes The American Economic Review, 46(2), 97-113 70 | P a g e Lintner, J (1962) Dividends, earnings, leverage, stock prices and the supply of capital to corporations The Review of Economics and Statistics, 243-269 71 | P a g e Lipson, M L., Maquieira, C P., & Megginson, W (1998) Dividend initiations and earnings surprises Financial management, 36-45 Litzenberger, R H., & Ramaswamy, K (1979) The effect of personal taxes and dividends on capital asset prices: Theory and empirical evidence Journal of financial economics, 7(2), 163-195 Lu, X (2000) Booty socialism, bureau-preneurs, and the state in transition: Organizational corruption in China Comparative Politics, 273-294 MacKie‐Mason, J K (1990) Do taxes affect corporate financing decisions? The journal of finance, 45(5), 1471-1493 Maggina, A., & Tsaklanganos, A (2012) Board size: Evidence from Greek public companies Business Management Dynamics, 1(12), 28-40 Majumdar, S K (1997) The impact of size and age on firm-level performance: some evidence from India Review of industrial organization, 12(2), 231-241 Majumdar, S K., & Chhibber, P (1999) Capital structure and performance: Evidence from a transition economy on an aspect of corporate governance Public Choice, 98(3-4), 287-305 Margaritis, D., & Psillaki, M (2010) Capital structure, equity ownership and firm performance Journal of Banking & Finance, 34(3), 621-632 Mashayekhi, B., & Bazaz, M S (2008) Corporate governance and firm performance in Iran Journal of Contemporary Accounting & Economics, 4(2), 156-172 Mathur, I., & Banchuenvijit, W (2007) The effects of privatization on the performance of newly privatized firms in emerging markets Emerging Markets Review, 8(2), 134-146 McManus, I., Ap Gwilym, O., & Thomas, S (2004) The role of payout ratio in the relationship between stock returns and dividend yield Journal of Business Finance & Accounting, 31(9‐10), 1355-1387 McMillan, J., & Woodruff, C (1999) Interfirm relationships and informal credit in Vietnam The Quarterly Journal of Economics, 114(4), 1285-1320 Megginson, W L., Nash, R C., & Randenborgh, M (1994) The financial and operating performance of newly privatized firms: An international empirical analysis The journal of finance, 49(2), 403-452 Megginson, W L., & Netter, J M (2001) From state to market: A survey of empirical studies on privatization Journal of Economic Literature, 39(2), 321-389 Miller, M H (1977) Debt and taxes The journal of finance, 32(2), 261-275 Miller, M H., & Modigliani, F (1961) Dividend policy, growth, and the valuation of shares The Journal of Business, 34(4), 411-433 Miller, M H., & Rock, K (1985) Dividend policy under asymmetric information The journal of finance, 40(4), 1031-1051 Mizuno, M (2007) Payout policy of Japanese firms: analysis on the survey of four industries listed on the Tokyo Stock Exchange Pacific economic review, 12(5), 631-650 Modigliani, F., & Miller, M H (1958) The cost of capital, corporation finance and the theory of investment The American Economic Review, 48(3), 261-297 Modigliani, F., & Miller, M H (1963) Corporate income taxes and the cost of capital: a correction The American Economic Review, 433-443 Myers, S C (1977) Determinants of corporate borrowing Journal of financial economics, 5(2), 147-175 Myers, S C (1984) The capital structure puzzle The journal of finance, 39(3), 574592 Myers, S C., & Majluf, N S (1984) Corporate financing and investment decisions when firms have information that investors not have Journal of financial economics, 13(2), 187-221 Ng, A., Yuce, A., & Chen, E (2009) Determinants of state equity ownership, and its effect on value/performance: China's privatized firms Pacific-Basin Finance Journal, 17(4), 413-443 Nguyen, D T., Diaz-Rainey, I., & Gregoriou, A (2012) Financial development and the determinants of capital structure in Vietnam Nguyen, T D K., & Ramachandran, N (2006) Capital structure in small and mediumsized enterprises: the case of Vietnam ASEAN Economic Bulletin, 23(2), 192211 Nickell, S (1981) Biases in dynamic models with fixed effects Econometrica: Journal of the Econometric Society, 1417-1426 Nissim, D., & Ziv, A (2001) Dividend changes and future profitability The journal of finance, 56(6), 2111-2133 Olimalade, A., Ojo, A., & Adewumi, W (1987) Business Finance; Issues and Topics, Nigerian Education Publication: Ibadan: University Press Onaolapo, A A., & Kajola, S O (2010) Capital structure and firm performance: evidence from Nigeria European Journal of Economics, Finance and Administrative Sciences, 25, 70-82 Ooi, J T (1999) The debt maturity structure of UK property companies Journal of property Research, 16(4), 293-307 Osegbue, I F., Ifurueze, M., & Ifurueze, P (2014) An analysis of the relationship between dividend payment and corporate performance of Nigerian banks Global Business and Economics Research Journal, 3(2), 75-95 Ouma, O P (2012) The relationship between dividend payout and firm performance: a study of listed companies in Kenya European scientific journal, 8(9) Oyinlola, O M., Oyinlola, F O., & Adeniran, J O (2013) The influence of dividend payout in the performance of Nigerian listed brewery companies International Journal of Economics and Management Sciences, 3(1), 13-21 Oyinlola, O M., Oyinlola, F O., & Adeniran, J O (2014) The influence of dividend payout in the performance of Nigerian listed brewery companies International Journal of Economics and Management Sciences, 3(1), 13-21 Ozkan, A (2001) Determinants of capital structure and adjustment to long run target: evidence from UK company panel data Journal of Business Finance & Accounting, 28(1‐2), 175-198 Palmer, J (1973) The profit-performance effects of the separation of ownership from control in large US industrial corporations The Bell Journal of Economics and Management Science, 293-303 Park, S H., & Luo, Y (2001) Guanxi and organizational dynamics: Organizational networking in Chinese firms Strategic Management Journal, 22(5), 455-477 Peng, M W., Buck, T., & Filatotchev, I (2003) Do outside directors and new managers help improve firm performance? An exploratory study in Russian privatization Journal of World Business, 38(4), 348-360 Peng, M W., & Luo, Y (2000) Managerial ties and firm performance in a transition economy: The nature of a micro-macro link Academy of Management journal, 43(3), 486-501 Penrose, E T (1959) The theory of the growth ofthe firm New York: Sharpe Pettit, R R (1977) Taxes, transactions costs and the clientele effect of dividends Journal of financial economics, 5(3), 419-436 Phillips, P A., & Sipahioglu, M A (2004) Performance implications of capital structure: evidence from quoted UK organisations with hotel interests The Service Industries Journal, 24(5), 31-51 Pleshko, L P., & Souiden, N (2003) The profit effects of product-market growth strategy: A financial services example Journal of financial services marketing, 7(3), 258-266 Poterba, J M., & Summers, L H (1984) New evidence that taxes affect the valuation of dividends The journal of finance, 39(5), 1397-1415 Qin, B., Song, Z M., Perrotta, M., Ge, J., Zhang, S., & Zhang, S (2011) Political connection and government patronage: Evidence from Chinese manufacturing firms Rafiei, M., & Far, S A H (2014) Effect of State Ownership on Firm Performance and Dividend Payout Policy International Journal of Academic Research in Business and Social Sciences, 4(7), 213 Rajan, R G., & Zingales, L (1995) What we know about capital structure? Some evidence from international data The journal of finance, 50(5), 1421-1460 Ramalho, R (2007) The persistence of corruption: evidence from the 1992 presidential impeachment in Brazil Unpublished paper, World Bank, available at http://www enterprisesurveys org/documents/collorpaper_jan_16 pdf Ramli, N M (2010) Ownership structure and dividend policy: Evidence from Malaysian companies Roberts, B E (1990) Political institutions, policy expectations, and the 1980 election: a financial market perspective American Journal of Political Science, 289-310 Roberts, M (2011) R., and Toni M Whited, 2011, Endogeneity in empirical corporate finance: working paper, University of Rochester Rodríguez, G C., Espejo, C A D., & Cabrera, R V (2007) Incentives management during privatization: An agency perspective Journal of Management Studies, 44(4), 536-560 Roodman, D (2006) How to xtabond2: An introduction to difference and system GMM in Stata Roodman, D (2009) Estimating fully observed recursive mixed-process models with cmp Ross, S A., Westerfield, R W., & Jaffe, J F (2002) Corporate Finance: the McGrawHill Companies Rozeff, M S (1982) Growth, beta and agency costs as determinants of dividend payout ratios Journal of Financial research, 5(3), 249-259 Salawu, R O., Asaolu, T O., & Yinusa, D O (2012) Financial policy and corporate performance: an empirical analysis of Nigerian listed companies International Journal of Economics and Finance, 4(4), 175 Salehnezhad, S H (2013) A Study Relationship between Firm Performance and Dividend Policy by Fuzzy Regression: Iranian scenario International Journal of Accounting and Financial Reporting, 3(2), 70 San, O T., & Heng, T B (2011) Capital structure and corporate performance of Malaysian construction sector International Journal of Humanities and Social Science, 1(2), 28-36 Seida, J A (2001) Evidence of tax-clientele-related trading following dividend increases Journal of the American Taxation Association, 23(s-1), 1-21 Shah, A., & Khan, S (2007) Determinants of capital structure: Evidence from Pakistani panel data Shan, Y G., & McIver, R P (2011) Corporate governance mechanisms and financial performance in China: Panel data evidence on listed non financial companies Asia Pacific Business Review, 17(3), 301-324 Shefrin, H M., & Statman, M (1984) Explaining investor preference for cash dividends Journal of financial economics, 13(2), 253-282 Shepherd, W G (1972) The elements of market structure The Review of Economics and Statistics, 25-37 Shergill, G., & Sarkaria, M (1999) Impact of Industry Type and Firm Characteristics on Firm-level Financial Performance—Evidence from Indian Industry The Journal of Entrepreneurship, 8(1), 25-44 Sheshinski, E., & López-Calva, L F (2003) Privatization and its benefits: theory and evidence CESifo Economic Studies, 49(3), 429-459 Shleifer, A (1998) State versus private ownership: National bureau of economic research Shleifer, A., & Vishny, R (1998) The grabbing hand Shleifer, A., & Vishny, R W (1986) Large shareholders and corporate control Journal of political economy, 94(3, Part 1), 461-488 Short, H., Zhang, H., & Keasey, K (2002) The link between dividend policy and institutional ownership Journal of corporate finance, 8(2), 105-122 Sierpińska, M (1999) Dividend policy in join-stock companies Теxt PWN.–Warszawa Simerly, R L., & Li, M (2000) Environmental dynamism, capital structure and performance: a theoretical integration and an empirical test Strategic Management Journal, 31-49 Singh, M., & Faircloth, S (2005) The impact of corporate debt on long term investment and firm performance Applied Economics, 37(8), 875-883 Smith, C W., & Watts, R L (1992) The investment opportunity set and corporate financing, dividend, and compensation policies Journal of financial economics, 32(3), 263-292 Song, J., Wang, R., & Cavusgil, S T (2015) State ownership and market orientation in China's public firms: An agency theory perspective International Business Review, 24(4), 690-699 Stiglitz, J E (1998) An agenda for development in the twenty-first century Paper presented at the Annual World Bank conference on development economics 1997 Stulz, R M (2000) Financial structure, corporate finance and economic growth International review of Finance, 1(1), 11-38 Su, D T., Doan, V N., & Bui, T T (2016) Tái cấu trúc doanh nghiệp Việt Nam: Phân tích tái cấu trúc tài sản Tạp chí Phát triển Kinh tế, 27(5), 17-44 Sun, Q., Tong, W H., & Tong, J (2002) How does government ownership affect firm performance? Evidence from China’s privatization experience Journal of Business Finance & Accounting, 29(1‐2), 1-27 Taub, A J (1975) Determinants of the firm's capital structure The Review of Economics and Statistics, 410-416 Thanatawee, Y (2013) Ownership structure and dividend policy: Evidence from Thailand Titman, S., & Wessels, R (1988) The determinants of capital structure choice The journal of finance, 43(1), 1-19 Tran, T T L (2015) Nghiên cứu nhân tố tác động đến cấu trúc vốn doanh nghiệp nhà nước cổ phần hóa TP Hồ Chí Minh Tạp chí Phát triển Kinh tế, 26(7), 02- 27 Travlos, N., Trigeorgis, L., & Vafeas, N (2001) Shareholder wealth effects of dividend policy changes in an emerging stock market Multinational Finance Journal, 5(5), 87-112 Truong, Q., & Ha, K D (1998) Human resource development in state-owned enterprises in Vietnam Practice in Human Resource Management, 6(1), 85-103 Uadiale, O M (2010) The impact of board structure on corporate financial performance in Nigeria International Journal of Business and Management, 5(10), 155 Uhlenbruck, N., & Castro, J d (1998) Privatization from the acquirer's perspective: A mergers and acquisitions based framework Journal of Management Studies, 35(5), 619-640 Uwuigbe, U., Jafaru, J., & Ajayi, A (2012) Dividend policy and firm performance: A study of listed firms in Nigeria Accounting and Management Information Systems, 11(3), 442 Velnampy, T., Nimalthasan, M P., & Kalaiarasi, M K (2014) Dividend Policy and Firm Performance: Evidence from the Manufacturing Companies Listed on the Colombo Stock Exchange Global Journal of Management And Business Research, 14(6) Vickers, J., & Yarrow, G (1991) Economic perspectives on privatization The journal of economic perspectives, 5(2), 111-132 Vo, X V (2014) Cơ cấu sở hữu giá trị doanh nghiệp: Nghiên cứu thị trường chứng khoán Việt Nam Tạp chí Phát triển Kinh tế, DS, 17-30 Vo, X V (2015) Foreign ownership and stock return volatility–Evidence from Vietnam Journal of Multinational Financial Management, 30, 101-109 Vu, V Q., & Le, T P V (2016) Mối quan hệ thể chế khả tiếp cận thị trường vốn doanh nghiệp Tạp chí Phát triển Kinh tế, 27(6), 80-101 Wald, J K (1999) How firm characteristics affect capital structure: an international comparison Journal of Financial research, 22(2), 161-187 Walker, G (1931) On periodicity in series of related terms Proceedings of the Royal Society of London Series A, Containing Papers of a Mathematical and Physical Character, 131(818), 518-532 Walter, J E (1963) Dividend policy: its influence on the value of the enterprise The journal of finance, 18(2), 280-291 Warner, J B (1977) Bankruptcy, absolute priority, and the pricing of risky debt claims Journal of financial economics, 4(3), 239-276 Wei, G., & Xiao, J Z (2009) Equity ownership segregation, shareholder preferences, and dividend policy in China The British Accounting Review, 41(3), 169-183 Westgaard, S., Eidet, A., Frydenberg, S., & Grosås, T C (2008) Investigating the capital structure of UK real estate companies Journal of property Research, 25(1), 61- 87 Wooldridge, J M (2015) Introductory econometrics: A modern approach: Nelson Education Wu, Z., & Chua, J (2009) Board monitoring and access to debt financing Corporate Governance and Firm Performance (pp 119-137): Emerald Group Publishing Limited Yule, G U (1927) On a method of investigating periodicities in disturbed series, with special reference to Wolfer's sunspot numbers Philosophical Transactions of the Royal Society of London Series A, Containing Papers of a Mathematical or Physical Character, 226, 267-298 Zakaria, Z., Muhammad, J., & Zulkifli, A H (2012) The impact of dividend policy on the share price volatility: Malaysian construction and material companies International Journal of Economics and Management Sciences, 2(5), 1-8 Zeitun, R (2014) Corporate governance, capital structure and corporate performance: evidence from GCC countries Review of Middle East Economics and Finance Rev Middle East Econ Fin., 10(1), 75-96 Zeitun, R., & Gang Tian, G (2007) Does ownership affect a firm's performance and default risk in Jordan? Corporate Governance: The international journal of business in society, 7(1), 66-82 Zhou, P., & Ruland, W (2006) Dividend payout and future earnings growth Financial Analysts Journal, 62(3), 58-69 Ziliak, J P (1997) Efficient estimation with panel data when instruments are predetermined: an empirical comparison of moment-condition estimators Journal of Business & Economic Statistics, 15(4), 419-431 APPENDIX Table A1: Xtabond2 model selection criteria Criteria F - test Description The rejection of this test means that the independent variables are not jointly equal to zero Arellano – Bond test First-order serial correlation is significant (AR1 < 0.1) Second-order serial correlation is insignificant (AR2 ≥ 0.1) (Arellano & Bond, 1991) Sargan test Because Sargan statistic is biased in the one-step estimation with ‘robust’ option (Roodman, 2006), this test is not mentioned in the result tables Hansen J - statistics Hansen J-statistic follows a �2 distribution where the number of overidentifying restrictions gives the degree of freedom The insignificance of the test (p-value ≥ 0.1) does not reject the null hypothesis that the applied instruments are valid Difference-in-Hansen If p-value is equal or above 1, the estimation model is inappropriate (Roodman, 2009) Steady state To reach the steady state, the estimated coefficient of the lagged dependent variable is required to be less than absolute unity (Roodman, 2009) Number of instruments The number of instruments should not exceed the number of groups, that is, the number of companies in the model (Roodman, 2009) Optimal instruments In order to identify the optimal number of instruments, the treatment on lag-limits is standardized by starting from lag2 for endogenous variable and lag1 for exogenous and predetermined variables) to the most available lags A number of other regressions are estimated by adjusting the upper and lower lag limits The regression that satisfies all the mentioned-above criteria is selected as the optimal regression Source: Roodman (2006), Roodman (2009), and Arellano and Bond (1991) APPENDIX Table A2: Descriptions of variables Variable Measurement = Return on assets ROAit Dividend Research Dependent variable EBITit Total Explanatory variables assetsit Cashdividend sit EATit DIVit = LEVit State ownership Ozkan, 2001) (Amidu & McManus et Abor, 2006; al., 2004; Rozeff, 1982) = Leverage (Gaud et al., 2005; Ooi, 1999; Total debtit (Aivazian et al., 2003; G R Jensen et al., 1992; Lam et Total assetsit State ownership rates in percentage al., 2012; Wei & Xiao, 2009) (Anil & Kapoor, 2008) Control variables (Al-Kuwari, 2009; J J Chen, 2004; Z Chen et al., 2005; Chikolwa, Sizeit = ln(Total assetsit) 2011; Farinha, 2003; Gugler & Yurtoglu, 2003; Harada & Nguyen, Size 2011; Lam et al., 2012; Ramli, 2010; Smith & Watts, 1992; Thanatawee, 2013; Wald, 1999; Wei & Xiao, 2009) Asset Growthit =Total assetsit − Total assetsit−1 Total assets growth Risk D K Nguyen & Ramachandran, 2006; Ooi, 1999; Titman & Wessels, it−1 Sales (T Salesit = ln(Salesit) Riskit = σ(EBITit) Total assets it 1988) (Vo, 2015) (Chikolwa, 2011; Graham et al., 2011) Liquidity assetsit − term LIQShort it = Short − term debt it Tangibility Non-debt tax shield (Ozkan, 2001; Rajan & Zingales, 1995; Wald, 1999) Instrumental variables Fixed assetsit + Real estatesit + Inventoryit (J J Chen, 2004; Gaud et al., TANGi,t = Total assets it 2005; Westgaard et al., 2008) Depreciationit + R&D expensesit (DeAngelo & Masulis, 1980; NDTSi,t = Fama & French, 2002; Fosu, Total assetsit 2013) ... that the thesis entitled ? ?Firm performance under the interactive moderation of capital structure, dividend policy, and state ownership? ?? has been solely conducted by myself under the supervision and. .. the author to take into account the interactive effects of both internal policies and state ownership on firm performance so as to clarify the moderation of firm policies to state ownership and. .. UNDER THE INTERACTIVE MODERATION OF CAPITAL STRUCTURE, DIVIDEND POLICY, AND STATE OWNERSHIP A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT