Determinants of dividend payout ratio: Evidence from listed companies on Ho Chi Minh stock market

Abstract

The main purpose of this paper research is to find out the association between dividend policy and financial leverage, investment, risk, corporate tax, liquidity, size, structure of asset, sale growth, cash flow, market-to-book value, ownership concentration, sale size, and return on equity of listed companies on Ho Chi Minh City Stock Exchange (HOSE). The sample consisted of 301 listed firms on HOSE in five years range, from the year of 2008 and 2012. The study is carried out in form of quantitative research approach with a deductive method. And we have based on some previous dividend theories including: the dividend irrelevance theory, the bird in hand theory, the signaling theory and the agency theory. So as to examine whether it exists the relationship between the selected factors and the dividend payout ratio, the paper uses both an Ordinary least square (OLS) and a linear regression. Multi-collinearity tests were also analyzed so as to prove that no multi-collinearity affected the results of the study research. The result indicates that some of the selected determinants have an impact on the companies’ dividend payout ratios. Especially, return on equity is the strongest positive impact on dividend payout ratio. Keywords: Dividend policy, Financial leverage, Investment, Risk, Corporate tax, Liquidity, Size, Structure of asset, Sale growth, Cash flow, Market-to-book value, Ownership concentration, Sale size, and Return on equity.