Dividend policy decisions, which involve the distribution of earnings to shareholders, have the potential to impact share price movements and market volatility.. While dividend payout ra
Topic Background
Investors closely scrutinize a firm's dividend policies before making investment decisions, as these policies are seen as indicators of a company's health and future prospects Research on this topic has spanned nearly a century, beginning in the early 1950s Many investors believe that a high dividend payout signifies strong company performance and potential for stock price appreciation However, the question remains: is this belief justified?
The relationship between dividend policy and firm value remains a contentious topic in finance, with ongoing debates among researchers and practitioners Decisions regarding the distribution of earnings to shareholders can significantly influence share price movements and market volatility Understanding this dynamic is essential for investors, policymakers, and corporate managers aiming to enhance their financial strategies This study focuses on examining the correlation between dividend policy and share price volatility, particularly within the context of Vietnam.
In recent years, the Vietnamese financial market, particularly the stock market, has seen substantial growth, drawing interest from both domestic and international investors The Vietnamese Ministry of Finance reported that foreign investment in the stock market rose by 11.6% in 2019 compared to the previous year Additionally, foreign investors purchased over 591.5 million USD in bonds, highlighting the country's evolving financial landscape This growth, influenced by unique economic factors and cultural elements, necessitates a closer examination of the relationship between dividends and investment in Vietnam.
Vietnamese companies often prioritize dividend payments due to cultural expectations and a commitment to rewarding shareholders Despite high dividend payout ratios, there is a lack of empirical research on how dividend policy affects share price volatility in Vietnam This study seeks to fill this gap by examining the factors that influence dividend policy decisions and their impact on share price fluctuations.
Dividend policy decisions in Vietnam are influenced by several key factors, including the legal and regulatory framework, financial characteristics of firms, and investor preferences The Vietnamese government has established policies that encourage dividend payments through tax incentives and regulations aimed at enhancing transparency and corporate governance, which can lead to more stable share prices Financial aspects such as profitability, cash flow, and capital structure also play a significant role, with firms that have stable earnings more likely to distribute dividends, while those with growth prospects may prefer reinvesting profits Additionally, traditional investor preferences for dividend income and stability are evolving, as an increasing number of investors seek higher returns through riskier investments, prompting companies to adapt their dividend policies accordingly.
7 into serious consideration Changes in investor sentiment and market conditions can influence share price movements and subsequent volatility.
Research Objectives
This study aims to analyze the relationship between dividend policies and share price volatility in the Vietnamese HOSE market, with specific objectives designed to uncover key insights into this dynamic.
This study aims to analyze the relationship between dividend payout ratios and share price volatility in the Vietnamese market By examining historical data from 120 companies listed on the HOSE, the research seeks to determine if higher dividend payouts correlate with reduced share price fluctuations.
This study aims to examine the impact of dividend yield on share price volatility within the Vietnamese market It will investigate whether companies that offer higher dividend yields tend to exhibit lower levels of share price volatility, suggesting that dividend yield may serve as a stabilizing factor for stock prices.
This research aims to employ the multiple least squares method for regression analysis to estimate models that assess the simultaneous effects of dividend payout and dividend yield on share price volatility, while controlling for other relevant variables.
This study explores the relationship between dividend policies and share price volatility, aiming to provide valuable insights for investors and managers Understanding these implications can help stakeholders make informed decisions based on the practical outcomes of the research findings.
This article explores eight key investors in the Vietnamese market, offering insights to help them make informed investment decisions Furthermore, it provides guidance for managers on formulating effective dividend policy strategies aimed at potentially minimizing share price volatility.
This study seeks to enhance the understanding of dividend policies and share price volatility in the Vietnamese HOSE market By achieving its research objectives, the findings will offer critical insights for investors, managers, and policymakers, facilitating better management of share price fluctuations and informed dividend policy decisions.
Research Methods
This study investigates the relationship between dividend policies and share price volatility in the Vietnamese HOSE market, utilizing the multiple least square (MLS) method to analyze data from 120 companies listed on the Ho Chi Minh Stock Exchange (HOSE) Employing a quantitative research design based on Baskin's framework (1989), the research aims to assess how dividend payout and dividend yield impact share price volatility through statistical techniques The primary data source includes financial statements and stock market data from 2012 to 2018, capturing essential variables such as dividend payout, dividend yield, and share price volatility, chosen for the conventional economic conditions during this period.
The global outbreak of the 2019 epidemic significantly impacted economies worldwide Financial statements were sourced from trusted databases like CafeF and Vietstock, while daily stock market data, including share prices, was retrieved from Fiintrade Premium.
Paper Overview
This paper is structured into six main chapters The introduction outlines the research background, purpose, and methodology Chapter 2 reviews existing literature on dividend policies and their impact on share price volatility, featuring five subsections: the first defines dividends and discusses various dividend policies; the second details common types of dividend policies globally; the third thoroughly examines prominent dividend theories to enhance understanding of corporate behavior regarding dividends; the fourth addresses the "Dividend Puzzle," exploring reasons behind cash dividend payments; and the final subsection summarizes the relationship between dividend policies and share price fluctuations Chapter 3 presents the methodology, covering hypothesis development, relevant prior research, the research model, and data collection sources Chapters 4 and 5 continue to build on these themes.
The article presents the regression results and discusses their implications, while also addressing some limitations of the model The concluding chapter summarizes the findings of the research model.
Literature review and theoretical framework
Dividend definition and dividend policy
Dividends represent a portion of a company's profits distributed to shareholders, typically in cash or additional shares Dividend policy encompasses the guidelines for when and how much to distribute to shareholders, with decisions made by the Board of Directors to balance shareholder welfare and sustainable company operations A well-structured dividend policy that aligns with investor preferences while ensuring long-term profitability can enhance stock attractiveness, ultimately benefiting the company Therefore, an effective dividend policy is a vital component of a corporate financing strategy.
This has been one of the most common, as well as fascinating subjects for economic researchers for several decades (Lintner, 1956; Miller & Modigliani, 1961; Black, 1976;
Modigliani,1982; Baskin, 1989) The more we look into dividend, the more we realize it is not as simple as we all think
Research spanning nearly a century has demonstrated that dividends are closely associated with various corporate issues, including corporate valuation (Miller & Modigliani, 1961), agency costs (La Porta et al., 2000), and asymmetric information (Miller & Rock, 1985; Li & Zhao, 2008) This article will delve deeper into these connections.
Approaches to dividend policies
The selection of a dividend policy is a vital decision in today's financial landscape, influencing both the value of the firm and the wealth of shareholders It is crucial for stakeholders to comprehend the different types of dividend policies and their effects to effectively navigate the complexities of corporate finance.
A stable dividend policy is a consistent and predictable strategy that companies use to distribute dividends to shareholders, aiming to maintain steady payouts over time, often through fixed rates or incremental increases This approach ensures regular and reliable dividend payments, providing shareholders with a stable income stream According to Gordon (1959), the assumption of stable dividend payments is integral to his model, linking stock price changes to dividend distributions and retained earnings He argued that maintaining constant retained earnings allows for accurate predictions of stock price fluctuations.
Twelve companies implementing a stable dividend policy prioritize consistent dividend payments, demonstrating their dedication to shareholder value and financial stability These firms, with greater access to capital markets, can easily alternate between borrowing and issuing securities, which helps minimize transaction costs As a result, they are positioned to offer more reliable and potentially higher dividend payouts.
In 1993, companies aimed to maintain stable dividend payments, minimizing fluctuations even amid economic uncertainty or inconsistent financial performance This strategy is especially attractive to income-focused and risk-averse investors seeking dependable and predictable dividend income.
The constant dividend policy involves a company paying dividends annually as a fixed percentage of its earnings, which exposes investors to the full volatility of the company's financial performance While this policy is easy to implement during stable earnings periods, it becomes challenging with significant fluctuations To manage this, companies should accumulate surpluses during high-earning years to create reserves for dividend equalization, ensuring consistent payments during lower-earning periods These surpluses are often invested in current assets like marketable securities for easy cash conversion when needed Ultimately, the constant dividend policy provides ordinary shareholders with treatment akin to preference shareholders, disregarding the investment considerations of the firm or its shareholders.
Investors focused on dividend income often favor a constant dividend policy, prioritizing stability over share price fluctuations, which can help stabilize the market price of a company's shares (Mitra, 2013) However, this fixed dividend approach may limit financial flexibility, making it difficult to maintain during challenging economic times In contrast, a constant dividend policy provides greater financial flexibility by permitting adjustments to dividend payments according to the company's performance and prevailing business conditions.
The residual dividend policy prioritizes investing in positive net present value (NPV) projects before distributing remaining profits as dividends to shareholders This strategy emphasizes that dividends should stem from residual earnings after meeting investment needs, aligning with the goal of maximizing shareholder wealth through reinvestment in high-return projects If a company faces more positive NPV opportunities than it can finance with retained earnings, it should seek external funding for these investments, with dividends being paid only from the leftover earnings However, many managers hesitate to adopt this policy due to its unpredictability in dividend patterns and the challenge of meeting investor preferences, particularly among those who are risk-averse.
14 averse It is more likely that managers would adhere to a modified residual policy, in an attempt of dividend smoothing.
Literature review
Share price volatility indicates the fluctuations in stock prices over specific time frames, ranging from short periods like a week or a month to longer durations such as five years.
Over a 10-year period, stock volatility serves as a key indicator of risk for investors; stocks that experience significant price fluctuations are deemed riskier Given that most investors prefer to minimize risk, they tend to shy away from such volatile stocks Consequently, shares in companies that offer quarterly or annual dividends are often viewed as safer investments This raises the question: do dividend-paying companies attract more risk-averse investors and receive higher valuations compared to those that do not pay dividends? Furthermore, does a more favorable dividend policy correlate with reduced stock risk?
Economic researchers have long studied the relationship between dividends and firm value, yet findings remain inconsistent Miller and Modigliani (1961) posited that dividends do not influence firm value or share price volatility, asserting that a firm's value is independent of its capital structure under certain assumptions Their MM theorem indicates that a company's financing method, whether through debt or equity, does not impact its overall value in a perfect market, provided other factors are constant This has led to the development of various dividend theories aimed at understanding the impact of dividend policy on share price volatility, which will be explored further in this paper.
Baskin (1989) challenged Miller and Modigliani's (1961) theory by providing empirical evidence from a study of 2,344 U.S companies, indicating a negative correlation between dividend yield and share price volatility; as dividend yield increases, stock price stability improves His model, which incorporates dividend yield and dividend payout as independent variables to explain price volatility, suggests that managers can manipulate stock risk through dividend policy By increasing dividend yield, companies can reduce stock price fluctuations and associated risks Baskin's model offers a more nuanced perspective on real-world financial markets compared to Miller and Modigliani's theory and has been widely researched globally, although findings vary by country For instance, Allen and Rachim (1996) found a significant negative relationship between dividend payout and stock price volatility in Australia, but their analysis of dividend yield contradicted Baskin by showing a positive yet insignificant effect on volatility.
Research on dividend policies and their effects on earnings pricing reveals a negative correlation between dividend payout and price volatility across various markets Studies by Conroy, Eades, and Harris (2000) in Japan and Rashid and Rahman (2008) in Bangladesh found that dividend yield had an insignificant influence on volatility In the UK, Hussainey et al (2011) confirmed that both dividend yield and payout ratio negatively impact price volatility at a significant level of 1% Similarly, Hashemijoo et al (2012) in Malaysia identified that dividend yield, payout ratio, and firm size negatively affect price volatility, with dividend yield and firm size being the most influential In contrast, Ilaboya and Aggreh (2013) found a significant positive relationship between dividend yield and price volatility in Nigeria, while the impact of dividend payout was statistically insignificant.
The impact of dividend policies on share price volatility remains a contentious issue, particularly in the Vietnamese market A study by Nguyen et al (2019) analyzed data from 141 companies across 13 industries, including consumer goods, mining, transportation, and entertainment, over a six-year period from 2011 to 2016 Utilizing a model similar to Baskin's (1989), the research found that dividend policies negatively influence share price volatility, aligning with previous findings However, it's important to note that this analysis began in 2011, two years post the global financial crisis, as the economy was just beginning to recover from its most challenging phase.
In 2011, Minh reported that Vietnam's inflation rate was high at approximately 18.58%, while the growth rate was low at only 5.9%, potentially introducing bias in economic models Phan and Tran (2019) explored the relationship between dividend policies and share price volatility using a dataset of 480 companies from the Ho Chi Minh Stock Exchange (HOSE) and Hanoi Stock Exchange (HNX) over eight years, from 2008 to 2015, and found a negative correlation between the two factors A year later, Nguyen et al (2020) conducted a broader study in the Vietnamese market, further examining these dynamics.
260 companies on HOSE was observed in between 2009 and 2018, while applying the model of Baskin (1989) The result was consistent with that of Nguyen et al (2019) and Phan and Tran
A study conducted in 2019 revealed a negative correlation between dividend payout ratio and share price volatility, as well as between dividend yield and share price volatility The initial phase of the period from 2009 to 2011 was notably sensitive, affecting not only Vietnam but also global markets, which may introduce bias in the model regarding stock price fluctuations This paper will concentrate on the post-crisis period, deliberately excluding the high inflation rate phase, to examine a time when the economy is functioning normally.
Theoretical framework: Relevant dividend theories
To understand dividends more clearly, several theories have emerged that explain their main purpose, the behavior of company managers regarding dividend policy, and investor reactions to policy changes Key concepts in this discussion include share price volatility, and the relevant theories are the dividend irrelevance theory, clientele effect, signaling effect, bird-in-hand theory, agency cost theory, and catering theory.
2.4.1 Dividend irrelevance theory (MM Theorem)
A study by Miller and Modigliani (1961) demonstrated that dividend policy is irrelevant to shareholders' wealth, provided the company's investment strategy remains unchanged and it continues to operate normally or experiences revenue growth Whether a company increases or eliminates its dividend payout does not impact stockholders' wealth, as confirmed under specific assumptions.
The pricing of each share must be strategically established to maintain a uniform rate of return, encompassing both dividends and capital gains, per dollar invested across the entire market within a specified timeframe.
The Efficient Market Hypothesis (EMH), proposed by Fama in 1970, asserts that a perfect market is characterized by the absence of anomalies, where all entities compete equally In such a market, no significant advantages exist regarding capital size or information that could dramatically influence share prices Additionally, there are no costs associated with share-related information or transaction fees, meaning no taxes, brokerage fees, or other expenses when stocks are issued or traded.
Investors are inherently rational, consistently seeking to increase their wealth They derive satisfaction from asset growth, whether it manifests as dividends, cash payments, or rising share prices.
Investors can enjoy perfect certainty regarding their investments, as all market participants, including corporations, guarantee both present and future profits This assurance ensures that all shareholders are informed about the anticipated cash flow of firms, fostering a transparent investment environment.
Miller and Modigliani demonstrated that, under certain assumptions, there is no correlation between dividend policy and shareholder welfare, indicating that a company's current value remains unaffected by any dividend payments While the MM theorem offers valuable insights, it oversimplifies real-world complexities, overlooking critical factors such as taxes, financial distress costs, agency issues, and market imperfections that can significantly impact a firm's capital structure and overall value Consequently, the MM theorem should be regarded as a theoretical framework rather than a practical reality Nonetheless, it has been instrumental in advancing corporate finance understanding and has laid the groundwork for subsequent theories that help economists decipher dividend policies and behaviors.
The agency relationship and agency cost theory in corporate finance, introduced by Jensen and Meckling in 1976, were later expanded by Jensen in 2005 to address the issue of overvalued equity This concept, however, has roots in earlier work by Berle and Means in 1932, which examined the modern corporation and private property To fully understand these theories, it is essential to first define the agency relationship.
The agency relationship is established when principals delegate decision-making authority to agents to act on their behalf, highlighting the separation of ownership and control This delegation requires a significant level of trust, as principals rely on agents to act in their best interests.
The agency relationship is characterized by an inherent conflict of interest, as agents may pursue their own self-interests, potentially diverging from the objectives of maximizing the
The relationship between principals and agents often suffers from information asymmetry, where agents have superior knowledge that can be exploited for personal gain This dynamic creates a risk for principals, necessitating proactive measures to ensure agents act in the best interest of the principals rather than their own Consequently, this situation gives rise to agency costs, highlighting the importance of effective oversight and alignment of interests in principal-agent relationships.
Agency costs arise from the agency relationship, reflecting the expenses that principals incur to address agency conflicts and align agents' interests with their own These costs include monitoring and supervision expenses, bonding costs, residual losses due to suboptimal decision-making, and the risk of opportunistic behavior by agents.
In corporate finance, the agency theory contrasts sharply with Miller and Modigliani’s rational behavior hypothesis Here, shareholders (principals) empower company managers (agents) to enhance asset value, specifically through share performance Agency costs emerge when conflicts of interest arise between managers and shareholders, as highlighted by Jensen (1986) Actions detrimental to shareholder welfare, such as reduced payouts or policy changes that negatively impact share prices, can create investor insecurity and exacerbate agency cost issues.
To address the agency cost of free cash flow, Jensen (1986) suggested that companies should issue debt rather than stock, thereby limiting future cash flow and reducing the cash available for managers to use at their discretion Additionally, La Porta et al (2000) proposed implementing corporate laws that empower shareholders, further mitigating agency issues.
21 entitled to a certain amount of power as a means to protect their investment from being dispossessed of by the insiders
This is a famous theory that was contributed by many research works such as Gordon
The foundational research by Gordon (1959), Lintner (1956), and Miller and Modigliani (1961) established key principles regarding dividends and their impact on stock prices Gordon highlighted investors' preference for current dividends due to their certainty and immediate income Lintner focused on how corporations distribute income between dividends and retained earnings, shedding light on the factors influencing these decisions Conversely, Miller and Modigliani offered a contrasting view by acknowledging the imperfections in capital markets, aligning with the Bird-in-Hand theory that underscores the significance of dividend payments in enhancing shareholder wealth.
In imperfect capital markets characterized by uncertainties, investors tend to favor dividends over retained earnings, as noted by Al-Malkawi (2007) and Shao, Kwok & Guedhami (2010) This preference arises from the risk-averse nature of most investors, who seek certainty rather than exposing themselves to high risks for potentially higher rewards Essentially, investors prefer to receive dividends—immediate returns—rather than relying on retained earnings, which are uncertain and may not yield future benefits.
This theory suggests that companies with high dividend payment would be more attractive to risk averse investors, which opposed clearly with the statement in the dividend
The dividend puzzle
The dividend puzzle, introduced by Black in 1976, suggests that lower dividend payouts can make a company's stock more attractive to investors This phenomenon occurs because dividends are taxed at a higher rate than capital gains, and investors only incur taxes upon realizing their gains Consequently, companies that either pay minimal dividends or none at all tend to be favored over those that distribute higher dividends.
Company directors typically prefer to maintain or increase dividends, as rising dividends can signal strong company prospects, leading to higher stock prices Consequently, by analyzing dividend changes, investors can gain deeper insights into a company's performance beyond what is communicated by management in media and financial statements.
The relationship between debtors and shareholders presents a significant conflict of interest, as creditors often restrict dividend payments to ensure that companies can fulfill their debt obligations An increase in dividends heightens the risk for creditors, while changes favoring creditors can negatively impact shareholders A proposed solution to this dilemma is for companies to negotiate an initial agreement to forgo dividend payments altogether This issue has been extensively studied in various research works since its introduction.
& Weigand, 2015), in order to find a proper explanation and up to this day, it is still controversial
In 1979, Bhattacharya addressed the dividend puzzle by proposing that cash dividend payments signal expected cash earnings of companies, particularly in a context characterized by asymmetric information between company managers and external investors.
Firm managers with insider information are incentivized to strategically adjust dividend payments to communicate private information to outside investors, particularly when the market value of their stock is undervalued By increasing dividends, they send a reliable signal to potential investors, as other companies without favorable insider knowledge would find it challenging to replicate such dividend policies without risking future reductions This aligns with the findings of John and Williams (1985), who highlighted an equilibrium in signaling taxable dividend payouts, where insiders with valuable information can allocate larger dividends and achieve higher stock prices when their company and shareholders need more cash than is available internally.
In 1990, Bernheim developed a model addressing the dividend puzzle through a tax perspective, highlighting that despite higher tax rates on dividends compared to share repurchases, companies often choose to pay dividends and may even issue new equity to distinguish themselves from lower-valued firms This concept was initially explored by Ofer and Thakor in 1987, who examined market reactions to dividend payments versus share repurchases However, their model did not adequately demonstrate that the costs associated with share repurchases outweighed the tax disadvantages of dividends, nor did it account for the common practice of simultaneously paying dividends and issuing new shares Bernheim's study rectified these shortcomings by incorporating this practice into a standard signaling model akin to Bhattacharya's 1979 framework.
Research indicates that low-quality firms tend to adopt a repurchase strategy due to the tax advantages of cash distributions, rather than emulating the dividend policies of higher-quality firms Conversely, high-quality firms face significant financial pressure when transitioning from dividend payments to share repurchases, as they must increase shareholder payouts to signal positive future prospects This shift leads to a considerable reduction in net income, supporting the findings of Kalay and Michaely (1993) regarding the impact of tax effects and dividend yields.
Meanwhile, La Porta et al (2000) provided a different explanation for the reason why company pays dividend, through the view of agency cost problem, based on the theory of Jensen
A study by Jensen (1986) highlighted the inherent conflict of interest between company insiders (managers) and outside investors, noting that insiders may exploit asymmetric information to pursue unprofitable projects that benefit themselves Porta et al (2000) proposed that implementing shareholder protection laws could effectively address this issue, with dividends serving as either a direct result of such laws or as an alternative means of protection Research on major firms across 46 countries utilized two agency models: the first indicated that companies distribute dividends in response to a protective legal framework to safeguard shareholders from agency problems, while the second model suggested that high dividend payments signal a company's commitment to shareholder welfare, thereby attracting more investors in environments lacking legal protections.
Firms continue to pay dividends despite tax disadvantages due to the demand from investors for dividends as a signal of the company's value Managers are motivated to maintain a steady or increasing stream of dividends to meet these investor needs (Frankfurter and Lane, 1984) This concept, rooted in the research of Shefrin and Statman (1984), draws on economic self-control theory and decision-making under risk Empirical evidence indicates that many investors have a strong preference for dividend payouts, with demographic factors influencing their choices For instance, retirees often favor companies with high dividend payout ratios to secure a reliable income stream for daily expenses, thus avoiding the need to sell shares for cash Additionally, some investors prefer cash dividends to exercise self-control over spending and to mitigate the regret associated with selling stocks before a market uptrend.
The dividend puzzle remains a significant topic of discussion, particularly in the last two decades Baker et al (2002) revisited this issue nearly 30 years later, analyzing the two primary cash distribution methods: cash dividends and share repurchases Their findings highlight that share repurchases offer greater benefits, especially concerning tax implications, as they are subject to lower taxation compared to cash dividends.
Share repurchases offer shareholders flexibility by allowing them to choose between receiving cash or retaining their stocks, which helps them avoid immediate taxation on capital gains However, these repurchases can lead to adverse selection costs, where informed investors may take advantage of their knowledge by selling overpriced shares back to the company In contrast, dividends provide equal payouts to all shareholders, eliminating the advantage for informed investors Research by Brennan and Thakor (1990) suggests that informed investors lean towards share repurchases, while uninformed investors prefer dividends Additionally, dividend increases are perceived as positive signals of stable cash flows, prompting firms to be cautious about raising them Conversely, share repurchases may indicate temporary cash flows or serve as a defense against takeovers, potentially altering the ownership structure and consolidating voting power if insiders retain their shares.
Despite theoretical support for cash dividend payments, their prevalence is diminishing in practice Research by Fama and French (2001) revealed a significant decline in the number of firms paying dividends within the U.S markets, particularly on the NYSE, AMEX, and Nasdaq Furthermore, Baker et al (2015) noted that, despite extensive academic efforts to explore dividend policy, no existing model has successfully integrated all aspects of this complex framework.
The dividend puzzle arises primarily because academic researchers typically develop theoretical frameworks in an abstract manner before seeking empirical support, often focusing on individual aspects rather than viewing the problem holistically Consequently, many theories explaining why firms opt to pay dividends tend to be simplistic However, researchers recognize that a thorough analysis of the interactions among different market imperfections is a complex and daunting challenge.
Methodology
Hypotheses development
In empirical research, hypotheses act as guiding beacons that illuminate the path to knowledge This paper aims to explore the relationship between dividend policy and stock price volatility, laying the groundwork for the investigation and formulating hypotheses that will shape the analysis Previous studies, such as Allen and Rachim (1996), have examined this relationship in the Australian market using a model similar to that of Baskin.
Research indicates a significant negative relationship between dividend payout and stock price volatility, while dividend yield shows a positive but insignificant impact on price volatility, contrasting findings from Baskin (1989) Similar results were observed in studies by Conroy, Eades, and Harris (2000) in Japan, and Rashid and Rahman (2008) in Bangladesh, who included industry dummy variables to analyze industry patterns In the UK, Hussainey et al (2011) found that both dividend yield and payout ratio negatively influence price volatility, a finding echoed by Hashemijoo et al (2012) in the Malaysian market Conversely, Ilaboya and Aggreh (2013) reported a significant positive relationship between dividend yield and price volatility in Nigeria, while the effect of dividend payout remained negatively insignificant.
This paper seeks to offer a fresh perspective on the inconsistencies observed in previous research results To guide this investigation, two primary hypotheses have been established based on prior studies.
Hypothesis 1: Dividend yield has a negative effect on share price volatility
There is an expected inverse relationship between dividend yield and share price volatility, meaning that an increase in dividend yield tends to reduce share price fluctuations Baskin (1989) posited that a company's dividend policy serves as a significant indicator of stock price volatility He argued that investors can gauge the risk associated with a stock by analyzing its dividend policy, suggesting that higher or lower dividend yields can influence share price oscillations, ultimately affecting the stock's risk profile.
Hypothesis 2: Payout ratio has a negative effect on share price volatility
Research by Gordon (1963) indicates that companies with high dividend payouts typically experience reduced risk, positively influencing their cost of capital and share prices Baskin (1989) further explored the inverse relationship between dividend payout and share price volatility, attributing this effect to both return rates and information signaling The study suggests that higher dividend payouts can indicate growth potential and investment opportunities, leading to less volatility in share prices Furthermore, Baskin posits that substantial dividend payouts reflect a firm's stability, which contributes to minimized fluctuations in share prices.
Research method
This paper’s methodology will be based on the theoretical framework of Baskin (1989),
By analyzing the correlation and using multiple least squares regression models, the relationship between dividend policy and stock price volatility in the Vietnamese stock market should be determined
This study will analyze a dataset of 120 manufacturing companies listed on the Ho Chi Minh Stock Exchange (HOSE) that paid cash dividends at least once during the seven-year period from 2012 to 2018 This timeframe was selected due to the absence of major economic disruptions, allowing for a stable operating environment for all companies involved Notably, the economy remained unaffected by the Covid-19 pandemic until 2019, making this period particularly suitable for the research objectives.
A regression model will be developed to analyze the relationship between share price volatility, which serves as the dependent variable, and two independent variables: dividend payout ratio and dividend yield This analysis will utilize multiple least squares regression techniques to derive meaningful insights.
PVi: Stock price volatility of firm i
DYi: Dividend yield of firm i
DPi: Dividend payout ratio of firm i e: Constant
To mitigate bias in the model, several control variables will be incorporated based on Baskin's (1989) recommendations These variables include the firm's size, growth, and debt, as each can significantly influence dividend policy and stock price volatility.
PVi = 1*DYi + 2*DPi + 3*FSi + 4*FGi + 5*Di + e (2) Where:
PVi: Stock price volatility of firm i
DYi: Dividend yield of firm i
DPi: Dividend payout ratio of firm i
FSi: Firm size of company i
FGi: Firm growth of company i
Di: Debt of company i e: Constant
This analysis will calculate the average of all variables over a seven-year period, spanning from 2012 to 2018 In this section, we will define each variable in detail and employ the specified formulas for accurate calculations.
Stock price volatility (PV) is the primary focus of this study and serves as the dependent variable To calculate PV, the annual range of stock prices is divided by the average of the highest and lowest adjusted prices for each year, and the resulting value is squared This procedure is repeated over six years, and the average of the squared values is computed A square root transformation is then applied to obtain a variable that can be compared to standard deviation, following the methodology suggested by Baskin (1989).
Hj: Highest stock price of year j
Lj: Lowest stock price of year j
Dividend yield (DY) is a key financial ratio that indicates the return on investment from dividends paid by a company, expressed as the dividend per share Calculated as a percentage of the share price, DY serves as a crucial independent variable in financial models It is important to note that the dividend is derived from gross dividends, which do not account for taxes.
34 credits are not included The average value is then calculated using all the available years of data The formula for computing DY is as follow:
Cj: Total cash dividend payment to common shareholders in year j
MVj: Firm market value by the end of year j
The dividend payout ratio (DP) represents the percentage of a company's earnings allocated to shareholders as dividends, serving as a key independent variable alongside the dividend yield (DY) To compute DP, divide the total cash dividends paid to common shareholders by the net income after tax for each year, and then average these values over a six-year period.
Cj: Total cash dividend payment to common shareholders in year j
IAj: Net income after tax of year j
Firm size (FS) is a key indicator of a company's operational scale, typically evaluated through metrics like total assets, market capitalization, revenue, or employee count For the purposes of this study, FS will be analyzed using these established criteria.
35 be calculated by averaging the firm’ market value for 7 years, then applying the natural logarithm function to the data This variable is calculated as follow:
MVj: Firm market value by the end of year j
Debt (D01) is the total amount owed by a company to its lenders or creditors, typically arising from borrowing agreements that require repayment with interest over a designated period This study focuses exclusively on long-term debt, in line with Baskin's (1989) research.
LDj: Long term debt of year j
TAj: Total asset of year j
Growth (G) signifies a company's enhancement in size, value, revenue, market share, or profitability over time, reflecting its overall expansion and operational progress This variable is crucial in our model and is computed by calculating the ratio of the change in total assets from the year's end to the beginning This calculation involves subtracting the total assets at the start of the year from those at the end, providing a clear measure of growth.
Subsequently, the average of these ratios is used as the result The calculation is done using the following formula:
Data
A comprehensive data set comprising 120 manufacturing companies listed on the Ho Chi Minh Stock Market (HOSE) will be gathered from reputable sources like Cafef, Vietstock, FiinPro, Wichart, and Reuters This data will encompass essential information, including dividend payments, various financial ratios, financial statements, and relevant news and events pertaining to these firms It is important that each company has a minimum of one cash dividend payment during the specified period.
In this study, the MLS method was utilized for statistical analysis, a widely recognized technique for estimating regression models with multiple independent variables This approach facilitates the simultaneous evaluation of various factors impacting the dependent variable, specifically share price volatility The research aims to explore the relationship between dividend policies and share price volatility through regression models inspired by Baskin's study.
In 1989, a study utilized dividend payout and dividend yield as independent variables to evaluate their impact on share price volatility, which served as the dependent variable The regression analysis conducted aimed to determine both the magnitude and statistical significance of the relationship between these variables.
The study utilized 37 variables and employed EViews software, provided by the University of the West of England, to estimate MLS regression models To explore the relationship between dividend policy and share price volatility, the research applied correlation analysis and multiple least square regressions.
Result of analysis
Descriptive statistics
This study examines 120 companies listed on the Ho Chi Minh Stock Exchange, presenting descriptive statistics of all model variables in Figure 1 The statistics include the mean, median, maximum and minimum values for each category, along with the standard deviation.
The analysis of 120 companies reveals notable variations in share price volatility, dividend payout, dividend yield, debt levels, and firm growth, while firm size shows minimal differences Share price volatility ranges from 0.347910 to 0.951686, with an average of 0.594470 Dividend payout varies significantly, with a maximum of 3.675769 and a minimum of 0.304854, resulting in an average of 1.092302 Dividend yield also shows a wide range, peaking at 0.584264 and dropping to 0.055536, with an average of 0.220648 Additionally, the debt analysis indicates that some companies rely solely on current liabilities, evidenced by a minimum debt value of 0, while others utilize long-term debt.
PV DP DY D01 FG FS
Mean 0.594470 1.092302 0.220648 0.102797 0.734069 26.96460 Median 0.596889 0.780349 0.189100 0.062869 0.606342 26.90003 Maximum 0.951686 3.675769 0.584264 0.593520 5.087478 32.17214 Minimum 0.347910 0.304854 0.055536 0.000000 -0.468222 24.17859 Std Dev 0.138995 0.743746 0.108934 0.117431 0.839786 1.485984
A study of 38 firms reveals a strategic preference for long-term debt, which constitutes nearly 60% of their total assets, with the highest recorded debt ratio at 0.584264 On average, these companies allocate about 10% of their total asset structure to long-term liabilities The growth rates among firms show considerable variability, ranging from a negative rate of -0.468222 to a remarkable increase of 5.087478, with an average growth rate of 0.734069 Additionally, the sample of 120 companies displays sizes between 24.17859 and 32.17214, yielding a mean size of 26.96460, while no significant differences are observed among listed firms on HOSE.
Correlation analysis
Correlation analysis is a statistical method that measures the strength and direction of the relationship between two or more variables, quantifying how changes in one variable are associated with changes in another This technique offers insights into the linear association between variables, aiding in the understanding of their co-variation In this study, correlation analysis is employed to explore the relationship between dividend policy and share price volatility, evaluating the degree of their association However, it is important to note that while correlation indicates a relationship, it does not imply causation; thus, further analysis is required to uncover the underlying mechanisms and causal pathways connecting these variables The correlation analysis results are illustrated in Figure 2 below.
The analysis reveals a negative correlation between dividend payout and price volatility, with a coefficient of -0.3828, indicating that as dividend payouts increase, share prices tend to stabilize A similar inverse relationship is observed between dividend yield (-0.3166) and long-term debt (-0.0609), suggesting that firms with higher dividend yields and long-term borrowing exhibit lower price fluctuations These findings align with the studies conducted by Hussainey et al (2011) and Hashemijoo et al (2012) Conversely, firm growth and size positively influence share price volatility, with coefficients of 0.2488 and 0.0571, respectively, indicating that larger firms and those with increasing total assets experience greater price oscillations.
Multiple regression result
The first stage regression results indicate that DP negatively impacts PV, with a coefficient of -0.056134 and a significant p-value of 0.0021, confirming a strong negative relationship Conversely, DY also shows a negative correlation with PV, but its p-value of 0.0690, which exceeds the 0.05 threshold, suggests that the effect of DY on PV cannot be conclusively established.
Figure 3: Stage 1 regression result – Equation (1)
PV DP DY FG FS D01
The next stage involves adding control variables (FS, FG, D01) to model (1) This leads to model (2) regression as shown in figure 4 below:
Figure 4: Stage 2 regression result – Equation (2)
Variable Coefficient Std Error t-Statistic Prob
S.E of regression 0.127674 Akaike info criterion -1.253989
Sum squared resid 1.907180 Schwarz criterion -1.184302
Log likelihood 78.23935 Hannan-Quinn criter -1.225689
Variable Coefficient Std Error t-Statistic Prob
S.E of regression 0.127211 Akaike info criterion -1.237238
Sum squared resid 1.844811 Schwarz criterion -1.097863
Log likelihood 80.23428 Hannan-Quinn criter -1.180637
The analysis reveals a significant negative relationship between DP and PV, with a coefficient of -0.046219 and a p-value of 0.0146 Additionally, DY also negatively impacts PV, evidenced by a coefficient of -0.0255895 and a statistically significant p-value of 0.0422.
In the third stage of the multiple regression process, the DP variable is eliminated from model (2) to avoid bias stemming from the strong correlation between DY and DP The revised equation is presented as follows:
PVi = 1*DYi + 2*FSi + 3*FGi + 4*Di + e (3) Equation (3) is regressed and the result is shown in figure 5
Figure 5: Stage 3 regression result – Equation (3)
The absence of DP does not affect the outcome, as DY remains negatively associate with
PV with the p-value of 0.0007 This has confirmed that price volatility is conversely affected by dividend yield
Variable Coefficient Std Error t-Statistic Prob
S.E of regression 0.130030 Akaike info criterion -1.201334
Sum squared resid 1.944388 Schwarz criterion -1.085189
Log likelihood 77.08005 Hannan-Quinn criter -1.154167
Similarly, DY is removed from equation (2) to run a regression Equation (2) is now expressed as follow:
The regression results from equation (4) are illustrated in figure 6, confirming a negative relationship between DP and PV, indicated by a coefficient of -0.063603 and a p-value of 0.0003 This outcome reinforces the validity of the second hypothesis, demonstrating that the absence of DY does not alter this relationship.
Figure 6: Stage 4 regression result – Equation (4)
Discussion
Discussion
This study explores the relationship between dividend policy and share price volatility in Vietnam, focusing on dividend yield and dividend payout as key variables Using a regression model, the analysis reveals a significant connection between these factors, highlighting the impact of dividend policies on market fluctuations.
Variable Coefficient Std Error t-Statistic Prob
S.E of regression 0.128980 Akaike info criterion -1.217540
Sum squared resid 1.913132 Schwarz criterion -1.101394
Log likelihood 78.05238 Hannan-Quinn criter -1.170372
43 negative association between dividend policy and stock price volatility was found, which is consistent with Baskin (1989), Hussainey et al (2011), Hashemijoo et al (2012) Nguyen et al
In recent studies by Phan and Tran (2019) and Nguyen et al (2020), the coefficients for firm size, firm growth, and long-term debt were estimated at -0.005580, 0.027509, and -0.028299, respectively, but none were statistically significant, with p-values of 0.5183, 0.0657, and 0.7873 Notably, the omission of debt in the model highlighted a statistically significant relationship between firm size and price volatility, with a coefficient of 0.037336 and a p-value of 0.0117 This suggests that larger firms, characterized by diversified operations and substantial market shares, experience increased sensitivity to market fluctuations and investor sentiment, resulting in heightened stock price volatility Additionally, larger firms attract more attention from risk-averse investors and analysts, making them more susceptible to significant impacts from news and market events, which further contributes to their stock price volatility.
This study highlights the negative correlation between dividend yield and dividend payout ratios with share price volatility, which is crucial for further discussion Although the coefficients did not achieve statistical significance, the implications for firm managers and investors remain important The findings indicate that factors such as firm size, growth, and long-term debt do not significantly influence stock price volatility, suggesting that these variables may not be strong determinants in this context.
To effectively manage stock price volatility, managers must consider the implications of firm size and growth, as these factors influence perceptions of stability and future earnings potential By prioritizing strategies that foster growth and a solid financial position, managers can reduce volatility and attract stability-seeking investors While the level of long-term debt alone may not significantly impact stock price volatility, it is crucial for managers to integrate it with other liabilities and assess the overall capital structure This approach helps mitigate excessive financial risk, which can lead to increased volatility Implementing sound debt management practices and effective risk management strategies is essential for minimizing stock price fluctuations and boosting investor confidence.
Investors seeking stability and lower risk may find dividend-paying stocks appealing, as the negative correlation between dividend yield and payout ratios with share price volatility indicates these companies can offer reduced stock price fluctuations Prioritizing companies with a consistent history of paying dividends and maintaining reasonable yield and payout ratios can signal financial reliability Ultimately, considering dividend policies is crucial for investors aiming to achieve steady income and minimize risk in their portfolios.
It is essential for managers and investors to recognize that the findings of this study are specific to the consumer goods sector The implications may differ across various industries, markets, and economic conditions, so caution is advised when applying these results.
The findings reinforce the theories of the bird in hand, signaling, and agency cost issues related to dividend policies and share price volatility.
The study highlights a negative correlation between dividend yield and share price volatility, supporting the bird in hand theory, which posits that risk-averse investors prefer stable dividends over frequent trading Higher dividend yields are associated with reduced share price volatility, as they attract income-seeking investors who value consistent income streams This relationship also aligns with signaling theory, where companies demonstrate financial stability and shareholder commitment through high dividend payouts, decreasing the need for external trading and thereby reducing uncertainty in share prices Notably, the impact of dividend yield on share price volatility is significantly greater than that of dividend payout Furthermore, addressing agency costs, which stem from conflicts between shareholders and managers, higher dividend payouts and yields can mitigate managerial inefficiencies and enhance transparency, ultimately leading to lower stock price fluctuations.
Limitations
This research is limited by the exclusion of information asymmetry, a significant issue in frontier and emerging markets like Vietnam, where company managers often possess considerably more information than external stakeholders.
A total of 46 investors have the ability to influence share prices to their advantage, which may impact predictions of share price volatility Additionally, this study is limited in scope, examining only 120 qualified companies on the HOSE market during the specified period.
The study highlights that the lack of diversity in the industry over the past seven years may unintentionally bias the model To enhance precision and address this issue, further research is essential Additionally, since this study builds on the framework established by Baskin (1989), it may inherit similar biases and problems present in his model Therefore, continued investigation is necessary to achieve more accurate and unbiased results.
Conclusion
This dissertation explores the connection between dividend policies and share price volatility in the Vietnamese stock market, using a dataset of 120 companies listed on the Ho Chi Minh Stock Exchange (HOSE) and the multiple least squares method The analysis reveals a negative relationship between dividend payout and share price volatility, indicating that higher dividend payout ratios correlate with reduced volatility This aligns with signaling theory, which suggests that dividend payments reflect a firm's financial health, thereby decreasing uncertainty in share prices Additionally, the study finds a negative relationship between dividend yield and share price volatility, suggesting that companies with higher dividend yields experience less price fluctuation, as investors tend to favor dividend-paying stocks for their stability.
The study examines the impact of dividend yield on share price volatility, suggesting that it serves as a proxy for expected returns and helps reduce volatility by attracting income-focused investors Focusing on the Vietnamese market, the research enhances understanding of the unique dynamics in this emerging economy, aligning with findings from previous studies in the U.S., UK, and Singapore, thus reinforcing the connection between dividend policies and share price volatility However, the study acknowledges limitations, such as reliance on secondary data, which may introduce biases, and its focus on the consumer goods sector, limiting generalizability to other sectors Future research should utilize primary data and consider the asymmetric information issues prevalent in developing markets like Vietnam to improve accuracy.
This study holds practical significance for investors, managers, and policymakers in Vietnam, as it highlights the impact of dividend policies on share price volatility By understanding this relationship, investors can make informed decisions, while managers can optimize their dividend strategies to potentially minimize volatility Additionally, policymakers can utilize these insights when developing regulations and incentives.
This dissertation explores the impact of dividend policies on share price volatility in Vietnam's stock market, revealing that higher dividend payouts and yields correlate with reduced volatility The regression analysis, utilizing the multiple least squares method, highlights the negative relationship between these factors These insights are valuable for academic researchers, investors, managers, and policymakers, enhancing the understanding of dividend dynamics in Vietnam's evolving market Future research should investigate additional variables that may affect this relationship across different contexts and markets.
Figure 3: Stage 1 regression result – Equation (1)
Figure 4: Stage 2 regression result – Equation (2)
PV DP DY D01 FG FS
Mean 0.594470 1.092302 0.220648 0.102797 0.734069 26.96460 Median 0.596889 0.780349 0.189100 0.062869 0.606342 26.90003 Maximum 0.951686 3.675769 0.584264 0.593520 5.087478 32.17214 Minimum 0.347910 0.304854 0.055536 0.000000 -0.468222 24.17859 Std Dev 0.138995 0.743746 0.108934 0.117431 0.839786 1.485984
PV DP DY FG FS D01
Variable Coefficient Std Error t-Statistic Prob
S.E of regression 0.127674 Akaike info criterion -1.253989
Sum squared resid 1.907180 Schwarz criterion -1.184302
Log likelihood 78.23935 Hannan-Quinn criter -1.225689
Figure 5: Stage 3 regression result – Equation (3)
Figure 6: Stage 4 regression result – Equation (4)
Variable Coefficient Std Error t-Statistic Prob
R-squared 0.197573 Mean dependent var 0.594470 Adjusted R-squared 0.162379 S.D dependent var 0.138995 S.E of regression 0.127211 Akaike info criterion -1.237238 Sum squared resid 1.844811 Schwarz criterion -1.097863 Log likelihood 80.23428 Hannan-Quinn criter -1.180637 F-statistic 5.613811 Durbin-Watson stat 2.121793 Prob(F-statistic) 0.000116
Variable Coefficient Std Error t-Statistic Prob
R-squared 0.154261 Mean dependent var 0.594470Adjusted R-squared 0.124844 S.D dependent var 0.138995S.E of regression 0.130030 Akaike info criterion -1.201334Sum squared resid 1.944388 Schwarz criterion -1.085189Log likelihood 77.08005 Hannan-Quinn criter -1.154167F-statistic 5.243929 Durbin-Watson stat 2.186881Prob(F-statistic) 0.000646
Variable Coefficient Std Error t-Statistic Prob
R-squared 0.167856 Mean dependent var 0.594470Adjusted R-squared 0.138912 S.D dependent var 0.138995S.E of regression 0.128980 Akaike info criterion -1.217540Sum squared resid 1.913132 Schwarz criterion -1.101394Log likelihood 78.05238 Hannan-Quinn criter -1.170372F-statistic 5.799307 Durbin-Watson stat 2.047721Prob(F-statistic) 0.000275
Allen, D E., & Rachim, V S (1996) Dividend policy and stock price volatility: Australian evidence
Allen, F., Bernardo, A E., & Welch, I (2000) A theory of dividends based on tax clienteles The
Alli, K L., Khan, A Q., & Ramirez, G G (1993) Determinants of corporate dividend policy: A factorial analysis Financial Review, 28(4), 523–547
Baker, H K., Farrelly, G E., & Edelman, R B (1985) A survey of management views on dividend policy Financial Management, 78–84
Baker, H K., Powell, G E., & Veit, E T (2002) Revisiting the dividend puzzle: Do all of the pieces now fit? Review of Financial Economics, 11(4), 241–261
Baker, H K., & Smith, D M (2006) In search of a residual dividend policy Review of Financial
Baker, H K., & Weigand, R (2015) Corporate dividend policy revisited Managerial Finance, 41(2), 126–144
Baker, M., Greenwood, R., & Wurgler, J (2009) Catering through nominal share prices The Journal of Finance, 64(6), 2559–2590
Baker, M., & Wurgler, J (2004) A catering theory of dividends The Journal of Finance, 59(3), 1125–1165
Barberis, N., & Thaler, R (2003) A survey of behavioral finance Handbook of the Economics of
Baskin, J (1989) Dividend policy and the volatility of common stocks Journal of Portfolio
Berle, A A., & Means, G G C (1991) The modern corporation and private property Transaction publishers
Bernheim, B D (1990) Tax policy and the dividend puzzle National Bureau of Economic Research Cambridge, Mass., USA
Bhattacharya, S (1979) Imperfect information, dividend policy, and" the bird in the hand" fallacy
The Bell Journal of Economics, 259–270
Black, F (1998) The dividend puzzle Streetwise: The Best of the J Portfolio Manag, 10
Brennan, M J., & Thakor, A V (1990) Shareholder preferences and dividend policy The Journal of
Conroy, R M., Eades, K M., & Harris, R S (2000) A test of the relative pricing effects of dividends and earnings: Evidence from simultaneous announcements in Japan The Journal of Finance,
Cornell, B., & Shapiro, A C (1987) Corporate stakeholders and corporate finance Financial
Elton, E J., & Gruber, M J (2011) Marginal stockholder tax rates and the clientele effect In
Investments and portfolio performance (pp 3–9) World Scientific
Fama, E F (1970) Efficient capital markets: A review of theory and empirical work The Journal of
Fama, E F., & Babiak, H (1968) Dividend policy: An empirical analysis Journal of the American
Fama, E F., & French, K R (2001) Disappearing dividends: changing firm characteristics or lower propensity to pay? Journal of Financial Economics, 60(1), 3–43
Fama, E F., & French, K R (2002) Testing trade-off and pecking order predictions about dividends and debt Review of Financial Studies, 1–33
Frank, M Z., & Goyal, V K (2003) Testing the pecking order theory of capital structure Journal of
Frankfurter, G M., & Lane, W R (1992) The rationality of dividends International Review of
Gordon, M J (1959) Dividends, earnings, and stock prices The Review of Economics and Statistics, 99–105
Gordon, M J (1963) Optimal investment and financing policy The Journal of Finance, 18(2), 264–
Hashemijoo, M., Mahdavi Ardekani, A., & Younesi, N (2012) The impact of dividend policy on share price volatility in the Malaysian stock market Journal of Business Studies Quarterly, 4(1)
Hussainey, K., Mgbame, C O., & Chijoke‐Mgbame, A M (2011) Dividend policy and share price volatility: UK evidence The Journal of Risk Finance, 12(1), 57–68
Ilaboya, O J., & Aggreh, M (2013) Dividend policy and share price volatility Journal of Asian
Jensen, M C (1986) Agency costs of free cash flow, corporate finance, and takeovers The American
Jensen, M C (2005) Agency costs of overvalued equity Financial Management, 34(1), 5–19
Jensen, M C., & Meckling, W H (2019) Theory of the firm: Managerial behavior, agency costs and ownership structure In Corporate governance (pp 77–132) Gower
John, K., & Williams, J (1985) Dividends, dilution, and taxes: A signalling equilibrium The Journal of Finance, 40(4), 1053–1070
Kahneman, D., & Tversky, A (2013) Prospect theory: An analysis of decision under risk In
Handbook of the fundamentals of financial decision making: Part I (pp 99–127) World
Kalay, A., & Michaely, R (2000) Dividends and taxes: A re-examination Financial Management, 55–75
La Porta, R., Lopez‐de‐Silanes, F., Shleifer, A., & Vishny, R W (2000) Agency problems and dividend policies around the world The Journal of Finance, 55(1), 1–33
Li, K., & Zhao, X (2008) Asymmetric information and dividend policy Financial Management,
Li, W., & Lie, E (2006) Dividend changes and catering incentives Journal of Financial Economics,
Lintner, J (1956) Distribution of incomes of corporations among dividends, retained earnings, and taxes The American Economic Review, 46(2), 97–113
Lintner, J (1962) Dividends, earnings, leverage, stock prices and the supply of capital to corporations The Review of Economics and Statistics, 243–269
Minh, H.B (2011) Corrected-update 2-Vietnam’s economy slows in 2011, inflation soars, Reuters Available at: https://www.reuters.com/article/vietnam-economy-growth- idUKL3E7NN07Q20111223 (Accessed: 09 September 2023)
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
Miller, M H., & Rock, K (1985) Dividend policy under asymmetric information The Journal of
Mitra, P (2013) In search of mathematical form for a production function of wheel machining
Available at: https://www.researchgate.net/publication/324770793_In_search_of_mathematical_form_for_a_p roduction_function_of_wheel_machining (Accessed: 05 September 2023) Smith, D M (2009) Residual dividend policy Dividends and dividend policy, 1, 115-126
Modigliani, F (1982) Debt, dividend policy, taxes, inflation and market valuation The Journal of
Myers, S C (1977) Determinants of corporate borrowing Journal of Financial Economics, 5(2), 147–175
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(2), 187–221
Nguyen, D T., Bui, M H., & Do, D H (2019) The Relationship Of Dividend Policy and Share Price Volatility: A Case in Vietnam Annals of Economics & Finance, 20(1)
Nguyen, T., Nguyen, H., Tran, Q., & Le, Q (2020) Dividend policy and share price volatility: empirical evidence from Vietnam Accounting, 6(2), 67–78
Nizar Al‐Malkawi, H (2007) Determinants of corporate dividend policy in Jordan: an application of the Tobit model Journal of Economic and Administrative Sciences, 23(2), 44–70
Ofer, A R., & Thakor, A V (1987) A theory of stock price responses to alternative corporate cash disbursement methods: Stock repurchases and dividends The Journal of Finance, 42(2), 365–
Pettit, R R (1977) Taxes, transactions costs and the clientele effect of dividends Journal of
Phan, T K H., Tran, N H., & Charfeddine, L (2019) Dividend policy and stock price volatility in an emerging market: Does ownership structure matter? Cogent Economics and Finance, 7 (1), 1–29
Polk, C., & Sapienza, P (2008) The stock market and corporate investment: A test of catering theory
The Review of Financial Studies, 22(1), 187–217
Rashid, A., & Rahman, A Z M A (2008) Dividend policy and stock price volatility: evidence from Bangladesh The Journal of Applied Business and Economics, 8(4), 71
Shao, L., Kwok, C C Y., & Guedhami, O (2010) National culture and dividend policy Journal of
Shefrin, H M., & Statman, M (1984) Explaining investor preference for cash dividends Journal of
Smith, D M (2009) Residual dividend policy Dividends and Dividend Policy, 1, 115–126.