Determinants of Dividend Payout Policy A Case of Nonfinancial Listed Companies in Vietnam

Moreover, after testing the effect on dividend payout ratios of the industries, the storage and food industry has a significant relationship with the dividend payout ratio and three indu[r]

Determinants of Dividend Payout Policy

A Case of Nonfinancial Listed Companies in VietnamDo Thi Van Trang*

Banking Academy, Hanoi, Vietnam,

No 12, Chua Boc Str., Dong Da Dist., Hanoi, Vietnam

Received 02 August 2016

Revised 26 September 2016; Accepted 22 December 2016

Abstract: This research examines the determinants that affect the dividend payout ratio of 156

listed companies in the Vietnamese security market during 2009 and 2014 This study consideredthe influences of ten independent variables including free cash flow, sales growth, company size,financial leverage, profitability and liquidity The empirical results show that there are three factorshaving a significant relationship with the dividend payout ratio Both the return on equity and thefinancial leverage variables are statistically and negatively significant with the dividend payoutratio; earnings per share are not clearly significant with the dividend payout ratio Moreover, in theeffect on the dividend payout ratio of the different industry sectors, the storage and food industryhas a significant relationship with dividend payout ratio and three industries including theagricultural-forestry-fishery industry; mining industry; manufacturing industry statistically havedividend payout ratios higher than other industries.

Keywords: Payout policy, dividend payout ratio, fixed effect model, random effect model.

1 Introduction *

Vietnam’s security market was launched 15years ago but has only been officially operatedfor the past 10 years (2005-2015) It can beclaimed that the Vietnamese stock market hasgrown energetically with 660 listed enterprises,including 301 companies listed in the Ho ChiMinh stock exchange (HOSE) and 359 listed inthe Hanoi stock exchange (HNX)1 After theglobal economic crisis in 2008, the list of jointstock companies has gradually been adapted toglobal integration by applying effectivepolicies Dividend policy is one of the effectiveways to create attractiveness for both domesticand international investors.

Dividend policy decides to distribute theenterprise’s profit in which a business makes

* Tel.: 84-915505445

Email: tranhabach@yahoo.com

1moi-co phan-cong-ty-niem-yet-giam-gan-5-361315.html.

http://bizlive.vn/chung-khoan/loi-nhuan-tren-the choice whehttp://bizlive.vn/chung-khoan/loi-nhuan-tren-ther to use earnings after tax toreinvest or to pay out dividends to shareholders.In terms of corporations, profit after tax isconsidered as the lowest cost funding source Itis kept to support capital for the company inreinvesting, expanding scale, and approaching alarger project for the development of businessnetworks However, maintaining a majorproportion of retained earnings also makes acompany’s shares become less attractive Incontrast, shareholders are always desirous of asignificant dividend payout ratio, because it istheir income from capital that gains from theinvestment Generally, company shares havinga high dividend payment rate will attract moreinvestors Consequently, a dividend paymentpolicy still is an issue that is paid muchattention by financial managers

The Vietnam stock market taking its placein a group of young countries, is rather volatile,and consists mainly of small-scale businesses.Investors therefore, have difficulty in easily

accessing transparent information Currently,the financial market is imbalanced with a veryhigh proportion (about 80%) of the bankingmarket, while the stock and insurance marketsaccount for only about 20%2 The imbalance ofthe capital market making the financial marketdistorted as banking credit has been financedshort, medium and long term Hence, the costsof capital from the banks for an enterprise formanufacturing and trading become higher.Dividend policy plays an important role as asignal to attract investors and helps businessesto access medium and long-term capital withlower costs

There are a lot of study results aboutdividend policy in developing or emergingmarkets Al-Malkawi (2008) researching on thedividend payment policy of Jordaniancompanies pointed out four factors affectingthis policy, including: the profitability of thebusiness, the financial leverage, the number ofoperating years, and the internal holding rate ofmanagers [1] Al-Twaijry (2007) studiedMalaysian emerging markets and indicated thatdividend policy business was affected by thedividend policy in the past and the future [2].Dividends were also influenced by profit inwhich the greater the company size, the higherthe dividend payment However, the operatingtime and activities sector did not impact on thedividend payout ratio Ahmed and Javid (2009)learned about the dividend payment policy ofnon-financial companies on the Karachi stockmarket in the period from 2001 to 2006 [3].They supported Linter’s theory that dividendpolicy goals of an enterprise are based onearnings per share (EPS) in the current andprevious year The profitability, the marketliquidity, and the percentage of internalownership had a positive impact on theincidence of dividend payments as long as themarket capitalization and the business scale hada negative impact on the dividend payout rate.Similar to research about the listed companieson the Karachi stock market in the 2005-2010

period, it was demonstrated that only corporateincome tax and business scale, among sixfactors, which were put into the regressionmodel, influenced the direction of the dividendpayment policy of the enterprise [4]

This study contributes to the process offinding what drives corporate dividends policyin Vietnam, especially focusing on themanufacturing, business and trading servicesenterprises on the Vietnam security market afterthe economic crisis in 2008 The papertherefore uses econometric models to test thefactors that affect the payout ratio of businessesin the period 2008-2014 In addition, thisresearch also provides information about thetheory of dividend payments in the secondsection, the dividend policy of the listedcompanies on the HOSE in the third part, andthe research results are evaluated in the fourthpart The research focuses on studying theimpact of factors on the dividend payout ratioof enterprises, including: free cash flow,company size, sales growth, profitability,financial leverage, return on equity (ROE),earnings per share (EPS), cash dividends onEPS, current ratio and collateral Due tolimitations of data collection, the model hasbeen tested on 156 companies on the HOSEfrom 2008 to 2014.

2 Literature review

2.1 Lintner’s theory dividend payout policy

John Lintner (1956), making the foundationfor the study of dividend policy, published hisresearch in 1956 [5] It was based on a surveyof 600 US listed companies According to theauthor’s view, a stable dividend policy wouldbe a good signal for the market about businessactivities as well as about stable future cashflows The US company managers believed thatreducing dividends would create negative andundesirable influences on the company's shares;therefore, enterprises would carefully considerincreasing or decreasing dividends during along term period of unsustainable growth(decline) to avoid unexpected fluctuations in

dividends, thereby maintaining and achieving arate dividend payout target Based on this study,Lintner built function setting the dividendpayout ratio target as follows:

D* = ri.Pit it (1)

Dit = ai + ci (D*it - Di (t-1)) + uit (2)

where r is the target pay-out ratio, Pt is the

current year's profits after taxes, Dit is the

change in dividend payments, and Dt and Dt-1

are the amounts of dividends paid in the yearsidentified by the dating subscripts t, and iidentifies the individual company.

According to Lintner’s theory given above,the target payout ratio of a company would beaffected by the last dividend payout ratio andthe profit after tax of the company during thestudied period.

2.2 Gordon’s theory of “The bird in hand”

In 1963, Gordon claimed a theory thatdividends reduced risks for investors, and wasnamed as “The bird-in-the-hand” theory byMiller and Modiglian’s in 1961 [6] Accordingto Gordon’s study, investors were concernedwith risk and the preferred dividends that theyreceived at present rather than to a company’spromising of prospect for high capital gain inthe future Gordon later indicated that a changein a company’s dividend payout ratio wouldchange an investors’ risk level of investing instocks of company A high dividend paymentwould reduce the risk or limit uncertainty aboutfuture income flows for shareholders, thusattracting more investors, and vice versa.Overall, the psychological behavior of theshareholders would affect the dividend policyof the enterprise

2.3 Transaction costs theory

Beside psychological risk aversion,transaction cost is known as a factor leadinginvestors to consider whether to sell stocks forcapital gain or to hold them for periodicdividend payment When companies pay lowdividends or do not pay any dividends,investors tend to sell their shares to get theprofit that arises from the transaction costs andbrokerage These costs become expensive with

individual stocks and small volumes, hence theincome from capital gains cannot completelyreplace the dividends income as proposed in thetheory of Miller and Modiglian (1961) [6].Obviously, investors would expect to earn ahigher dividend payout ratio to reduce costs

2.4 Agency costs theory

Agency cost is one of the factors affectingthe dividend payments rate Jensen andMeckiling developed this theory in 1976through the conflict of interests betweenmanagers and shareholders [7] When acompany pays a high dividend payout ratio,cash flow in business administration will belimited The company must issue additionalshares on the market to raise capital to expandthe business Thus, the number of shareholdersincreases and the company's capital fromoutside management is used more efficiently,and the interests of shareholders are enhanced.Investors will react positively with informationabout the high rate of payment dividends.

2.5 Signal theory

Based on the role of the corporatemanagement aspect, signal theory stands on adifferent perspective to explain the dividendpolicy of the enterprise According to thistheory, Bhattacharya (1980) and John andWilliams (1985) indicated that dividend policywas supposed to be a signal to market managersand investors [8, 9] When the signal of highdividend ratio that contains much positiveinformation about the operations, earnings, andfuture cash flow of the business is spread,investors will respond respectively uponreceiving this signal A positive signal canmake investor desire a company’s stocks.

2.6 Catering theory

Baker and Wurgler (2004) mentioned thetheory that concerned meeting the investors’needs of dividends (catering theory) [10] Theresearch indicated that investors would bewilling to invest in shares of companies if thecorporate governance met their requirements.

According to this theory, the company’s stockprice would increase by satisfying anyreasonable or unreasonable dividendrequirements of investors In other words, a nodividend payment company will launch adividend payout when they notice that thecompany-paying dividend would have a higherprice in the market This theory was based onthe theory of psychological behavior ofinvestors and tested by Baker and Wurgler [10].

2.7 Tax preference theory

Miller and Scholes (1978) showed that thedividend policy in the tax environment differsfrom that in a perfect market [11] According tothis theory, an enterprise should not pay highdividends because they reduce the investors’income and the company value In particular,the difference between tax on dividend’sincome and capital gains in the US would affectthe behavior of the shareholders Tax ondividend income is higher than capital gains asusual For instance, in the United States from1961 to 2003, in order to save tax forshareholders, companies paid a low dividendpayout ratio and repurchased their stocks.

2.8 Dividend payout theory in termsof issuing costs

A high dividend policy will reduce theamount of retained earnings to reinvest in the nextbusiness cycle; this makes a company findadditional funding sources from outside when ithas larger capital requirements However, raisingcapital by issuing new shares leads to increasingthe cost of capital and issuing costs Therefore,the corporate governance tends to keep retainedearning to reduce the cost of capital.

2.9 Life cycle theory

Fama and Frech (2001) studied life cycletheory and indicated that companies have arational dividend policy for the operatingsituations in each stage of the business lifecycle [12] In the first part of the business cycle,companies must use a lot of outside capital;therefore, be under stringently external control.

Moreover, managers hold a high ownershipproportion in this period; hence, interests ofboth managers and investors are similarrespectively Therefore, along with theincreases in the production scale, the dividendpayout ratio grows step by step These factorswill reduce agency costs In the next stage whenthe business is stable, managers will be morecautious before adventuring projects Besides,the ability of accessing information about theentire company will become slower due to thelarger scale In this phase, the company willmaximize shareholders’ value by distributing itsprofits through dividend payments In the finalstage of the cycle-low profitability, companiesneed to maximize the value of the companythrough liquidation to pay out all theshareholders However, if managers continue toexpand their scale in this period, the targetdividend payout policy will differ to thedividend policy that managers make.

Based on various theories, a number ofempirical studies have been conducted toresearch the determinants of dividend policy.This study has addressed which factors canaffect the dividend policy of listed companies inthe HOSE and whether differences exist in thedividend policy among industries

3 Methodology

Many previous articles have studied thedeterminants that influence corporate dividenddecisions This research focused on ten factorsthat affect the dividend payment policy of thelisted companies on the Ho Chi Minh StockExchange in Vietnam.

Free cash flow: The liquidity or cash flow

position plays an important factor of role in thedividend policy The agency cost theory foundthat firms should pay higher dividends toprevent managers from investing capital ininefficient projects and wasteful activitieshaving more free cash flow Amidu and Abor(2006) indicated that there was a significantlypositive relationship between cash flow anddividend payout ratios in the case of Ghana

[13] Mehta (2012) has shown the affect ofprofitability, liquidity and leverage on dividenddecisions, thus the more stable cash flows are,the easier it is to pay dividends [14]

Collateralized assets: When firms use

loans, their financial indicators should meet thefinancial requirements of creditors Accordingto Chen and Dhiensiri (2009), if firms ownedcollateralized assets, credit restrictions wouldbe fewer, thus the risk of loans with morecollateralized assets is lower than the oneswith no collateralized assets [15] This willlead to fewer agency problems betweenshareholders and bondholders when firms payhigh dividend payments.

Size: According to Chay and Suh (2009)

[16] and Mehta (2012) [14], bigger size firmsconduct higher dividend policies and vice versa.Since big companies can access easily manysources from capital markets, this will lead toraised funds with lower issuing costs and higheragency costs Companies of a larger scale tendto pay higher dividends than the smaller ones,

ceteris paribus The scale of a company might

be measured by sales, total assets, thecapitalized market value, the equity value andso on However, this research has used totalassets to reflect the size of a firm and assumedthat dividend payout is positively associatedwith the firm’s size.

Growth: When firms have many

opportunities to invest and expand thecompany’s size, managers will tend to retainmore profit to reinvest as this capital has lowercosts than the others, such as borrowing fromoutsiders or issuing new stocks That meansfirms must reduce or not pay the dividend andvice versa In contrast, the agency theoryshowed that when a firm has a strong cashflow but has inefficient investments, the firmwould pay a high dividend ratio in order toavoid the wasting of money by the managers[7, 13, 17] Growth has been measured by thesales growth ratio.

Financial leverage: Rezeff (1982) [17],

Myers and Majluf (1984) [18], Jensen (1986)[19] and Mehta (2012) [14] have stated that

financial leverage shows the total debts to thetotal liabilities and owners’ equity The higherthe debts the firms use, the more control bycreditors and the more financial risk they mayface Therefore, if firms have higher financialleverage, the dividend ratio may be lower Thefirms must make payment for creditors beforepaying dividends to shareholders Moreover,firms with a high debt ratio may reduce thedividend ratio since they do not want to face thehigh capital costs of outsiders’ funding.Financial leverage has been measured by totalliabilities to the owners’ equity.

Profitability: The pecking order theory

showed that the capital in firms must be firstlyfinanced internally [18] If external funding isrequired, firms prefer to borrow money fromcreditors than to issue shares in order to reducecosts and save tax Thus, taking into accountthat more profitable firms like to maintain a lowdividend policy to avoid the high costs of

issuing debt and equity financing, ceteris

paribus On the other hand, some scholars

suggest that profitability has a positiverelationship with the dividend payment Highand stable profitable firms may have strongcash flows and that is the reason why theirmanagers pay more dividends for shareholders[20] Profitability has been measured byreturn on assets, return on equity and earningsper share.

Liquidity: The liquidity or cash flows

position is an important determinant ofdividend payouts According to Amidu andAbor (2006) and Mehta (2012), liquid firms arelikely to pay higher dividends to shareholdersthan firms with a liquidity crunch [13, 24].Companies have to maintain liquidity at a stablelevel in order to keep the flexibility in theiroperation The higher the liquidity of firms, thestronger the cash flow Liquidity has beenmeasured by the current ratio.

Dividend payout ratio on the earning pershare: Chay and Sub (2009) suggest that this

factor has a positive relationship with thedividend payment ratio as firms with a strongcash flow are capable of paying higherdividends as compared to firms with weakercash flows [16].

4 Data

This research focuses on analyzing the cashdividend payout ratios of 156 listed companieson the Ho Chi Minh stock market from 2008 to2014 Since the HOSE is in the process ofimprovement and development of both theoperation and legal framework, the estimate ofconverting the value of stock dividends intocash is inaccurate and complex Therefore, inthis section, cash dividend payout is consideredas which factors have a relationship with theHOSE’s dividend payout ratio from 2009 to2014 The banking and finance sector have theirown characteristics compared to other sectors.Thus, this sector will not be included in thisresearch Moreover, the priority in this sectorand the information asymmetry in the

developing Vietnam stock market and the cut orreduction in its dividend payment may causesignificant fluctuations in the market.Therefore, this research concentrates on non-financial listed companies Up to 2009, the HoChi Minh stock market had 184 listedcompanies and 172 listed companies in the non-financial sector However, 16 companies weredelisted on the HOSE after the world economiccrisis from 2009 to 2014 Finally, this study hasobtained 156 non-financial listed companies.

The model in this research can bewritten as:

Table 1 Variable definitions

Dependent variable

Dividend payout ratio DPR Cash dividends / Par value

Independent variables

Collateralisable assets ASSET Fixed assets / Total assets

Firm growth GROWTH Current sales / last year salesFinancial leverage LEV Liabilities / Equity

Source: Authors’ summary.

5 Empirical results

Table 2 shows the descriptive statistics forlisted firms in the HOSE; the average dividendpayout ratio of the 156 listed companies during2008 and 2014 is 11.978% with a standarddeviation of 11.814% This means, on average,the listed companies on the Ho Chi Minh stockmarket spent 11.978% of their profit after tax to

pay dividends This table illustrates that afluctuation gap of the dividend payout ratio oflisted companies in the HOSE is quite largewith a maximum value of 70% and a minimumvalue of 0% In addition, this table describes theaverage value, standard deviation andfluctuation gap of 10 independent variables.

Table 3 describes the correlationcoefficients among the variables of listed

companies in the HOSE Most of theindependent variables have a low correlationwith the others, but represent quite highcorrelations between FCF and ASSET, ASSETand ROA, ROE and EPS (0.8708; 0.7401;0.9098 respectively) that may cause themulticollinearity in the model However, thissign has an insignificant effect on the regressionmodel in general Therefore, most of theindependent variables have no strongcorrelation and show a good sign to test themodel in the next section.

The first econometric model that has beenused to deal with the panel data is PooledOrdinary Least Square (Pooled OLS) Thismodel tests how the independent variablesaffect the dependent variable with assumptions.In order to estimate the appreciation ofindependent variables, this article regressesmodels and calculates the BIC (Bayesianinformation criterion) value after excluding theindependent variable BIC is a criterion formodel selection among a finite set of models

and the model with the lowest BIC is the bestone Finally, this study chooses the Pooled OLSwith the smallest BIC value The Pooled OLSwith 10 variables is the chosen model to study(Table 4).

The regression with the Pooled OLS modelis illustrated in Table 5 According to the Fishertest about the appropriateness of the model, theP-value is approximately 0% smaller than 5%,so the null hypothesis: “The Pooled OLS modelis not appropriate” is rejected This means thePooled OLS can be chosen as the independentvariables and may explain the change of thedependent variable (DPR).

To estimate the appropriation of betacoefficients individually, this study continues tocompare each P-value with 5% The nullhypothesis is “βi = 0” (with i = [1; 10]) If the P-value is greater than 5%, the null hypothesiscannot be rejected This means that thevariables including FCF, ASSET, GROWTHand DIVIDEND seem not to explain thefluctuation of DPR.

Table 2 Descriptive statistics for listed firms in HOSE

Source: Authors’ summary.

Table 3 The correlation coefficients among variables of listed companies in HOSE

Source: Authors’ summary.

Table 4 The BIC value of each Pooled OLS model

The regression modelAIC valueBIC valuesmallest T-statistic valueThe variable with the

3 variables (excluding CR) -1202.464 -1183.826 3 remaining variables have theapproximate T-statistic value.

Source: Authors’ summary.

In the Pooled OLS model, this articleexamines some assumptions of OLS andconcludes that this model does not satisfy thehomoscedasticity assumption Thus, the Robustmodel in STATA software is conducted torepair this error However, when testing forhomoscedasticity, the Robust model still doesnot satisfy this assumption, but it is the bestPooled OLS model.

The Pooled OLS has lots of strictassumptions and it is difficult to satisfy all ofthem Therefore, this article applied the fixedeffect model (FEM) and the random effectmodel (REM) to replace the Pooled OLS TheHausman test, which was developed byHausman in 1978, is conducted in order tochoose the most suitable model [21] Based onthis theory, the null hypothesis is: “There is nodifference between the two models” If thishypothesis is rejected, the FEM is chosen

instead of REM Furthermore, this articleexamines the individual effect of each sector onthe dividend payout ratio by adding dummyvariables into the regression model.

Based on the results of FEM on STATAsoftware, the P-value in this model of 7.9% isgreater than 5%, therefore, the null hypothesisis rejected: “The FEM is not appropriate” Thatmeans the independent variables cannot explainthe fluctuation of the dependent variable.

The model’s P-value (0.01%) isapproximately 0% The result is quite smallerthan 5%, so the null hypothesis is rejected:“The REM is not appropriate” This means theindependent variables including FCF, ASSET,SIZE, GROWTH, LEV, ROA, ROE, EPS, CR,and DIVIDEND seem to explain the fluctuationof the dependent variable (DPR) Comparingthe P-value of each independent variable at 5%,the result has indicated that 3 variables,

including LEV, ROE and EPS, are statisticallysignificant with DPR (0.6%; 0.5%; and 0%,respectively) In summary, the fluctuation of

DPR can be explained by the change of3 factors: the financial leverage, the return onequity and the earning per share.

Table 5 Results based on OLS, FEM and REM

FCF (0.506)0.0016 0.0061 (0.282) -0.0019 (0.251) 0.0011 (0.619)Asset -0.0006(0.378) -0.00064 (0.205) 0.0005 (0.394) -0.0005 (0.460)Size (0.07)*0.0136 0.0136 (0.094)* 0.0007 (0.496) 0.0196 (0.006)***Growth -0.00006 (0.147) (0.000)***-0.00006 -0.00001 (0.702) -0.00005 (0.184)LEV (0.000)***-0.0062 (0.040)**-0.0062 (0.006)***-0.0039 (0.000)***-0.00507 ROA (0.070)*0.0030 0.0030 (0.017)** 0.0005 (0.683) 0.0029 (0.060)*ROE (0.000)***-0.1055 (0.010)***-0.1055 (0.005)***-0.0448 (0.000)***-0.0848 EPS (0.000)***0.00001 (0.001)***0.00001 (0.000)***0.00001 (0.000)***7.44e-06 CR (0.003)***0.005 (0.089)*0.0050 (0.219)0.0018 (0.001)***0.0055 Dividend -0.0004 (0.403) (0.001)***-0.00003 -0.00012(0.970) -0.00001 (0.802)

Note: *, ** and *** are significance at 10, 5 and 1% levels, respectively; p-values are in parentheses.

This research shows 3 models: Pooled OLS,FEM and REM, in which the FEM is notappropriate to explain the changes of DPR.Therefore, the Breusch-Pagan Lagrangemultiplier test is conducted to choose betweenPooled OLS and REM The null hypothesis is“the Pooled OLS is appropriate” The P-value,which is approximately 0%, proves that the null

hypothesis is rejected and the Random EffectModel is chosen.

The result of REM points out that there3 factors including the financial leverage, returnon equity and earnings per share among10 factors having a significant relationship with

the dividend payout ratio of listed companies inthe HOSE.

Specifically, as can be seen from the resultthat the coefficient of the EPS variable isapproximately 0, this factor is not statisticallysignificant with the DPR From Table 5, theREM indicates that ROE is significant andnegatively related to DPR This is explained inthat when ROE increases by 1%, DPRdecreases by 0.045% So the result from REMis contrary to the theoretical prediction.According to the research assumption, firmswith high and stable profitability may have astrong cash flow to pay dividends Therefore,this result is explained by the pecking ordertheory that firms want to retain more earningsto avoid high costs, and explains the higher theprofit of firms, the lower the dividends.

The model indicates that LEV has a positiveand statistically significant relationship withDPR When financial leverage increases by 1%,DPR decreases by 0.004% This result is expectedwith the research prediction from transaction costtheory According to this theory, firms with highfinancial leverage tend to reduce the dividendpayments to avoid high transaction costs and theother costs However, the value of the LEV’s betais quite small, means that the effect on thedividend payout ratio of leverage is not significantas previously expected.

Furthermore, in order to test if differentindustries will have an influence on the DPR,this article tried to apply the Pooled OLSregression model for 10 independent variablesand the dummy variables In Table 5, Dnln,Ddien, Dxd, Dvtai, Dbds, Dkhcn, Dcbct, Dkk,Dbb are dummy variables for the agricultural-forestry-fishery industry, the manufacturing anddistribution of electricity and gas, theconstruction industry, the transportation andstorage industry, the real estate industry, thescientific and technical services industry, themanufacturing industry, the mining industryand other services industries, respectively Thebase industry not included in the model is thestorage and food industry (These differentindustries are distinguished by the statesecurities commission of Vietnam in 2009).

According to the result of regressing themodel with 9 dummy variables, it can be seenthat three industries, including the agricultural-forestry-fishery industry, the mining industryand manufacturing industry, have statisticallysignificant differences in the DPR from thestorage and food industry Specifically, threeindustries are statistically higher in DPR thanthe storage and food industry (the betacoefficient value of Dnln, Dcbct and Dkk isgreater than 0) In addition, the P-value of β0

which is lower than 5% shows that the storageand food industry has a significant relationship

with the dividend payout ratio, ceteris paribus.

6 Conclusion

This research examines the determinantsthat affect the dividend payout ratio of 156listed companies in the Ho Chi Minh stockmarket during 2009 and 2014 This study hasalready considered the influences of tenindependent variables including: free cash flow,growth, size, financial leverage, profitabilityand liquidity The empirical results have shownthat there are 3 factors having a significantrelationship with the dividend payout ratio inwhich, both the return on equity and thefinancial leverage variables are statistically andnegatively significant with the dividend payoutratio; the earning per share is not clearlysignificant with dividend payout ratio.Moreover, after testing the effect on dividendpayout ratios of the industries, the storage andfood industry has a significant relationship withthe dividend payout ratio and three industries,including the agricultural-forestry-fisheryindustry, the mining industry andmanufacturing industry, are statistically individend payout ratio higher than the storageand food industry Therefore, both the listedcompanies and investors can have moreinformation to make their decisions on theHOSE in particular and the Vietnam stockmarket in general