| dc.description.abstract | This paper investigates the effect of agency costs on dividend payout
policies. The study is conducted in Vietnam, an emerging market with the observation of
102 non-financial firms listed on Ho Chi Minh Stock Exchange (HOSE). The database
includes 3 years from 2011 to 2013. Fixed effect model with robust standard errors is the
most appropriate for examining the effect of explanatory variables on dividend payout
ratio. Explanatory variables are institutional ownership, insider ownership, ownership
dispersion, foreign ownership, size, leverage, and growth. According to the results, the
first three variables are found to be significantly related to dividend payout ratio.
Moreover, with the exception of ownership dispersion, when the institutional ownership
and insider ownership increase in percentage, managers’ action is put under more
scrutiny which causes agency costs to decrease. Thus, dividend payment is less needed
and the payout ratio reduces. Meanwhile, foreign ownership, size, leverage, and growth
are found to have no significant relationship with the payout ratio. Besides, the study also
examines the difference in dividend policies among industries. Utilities industry,
wholesale trade and retail trade industry, accommodation and food services industry are
there industries that have high dividend payout ratio while mining, quarrying, and oil and
gas extraction industry, agriculture production industry, transportation and warehousing
industry are among the ones that pay low dividends.
To sum up, the research shows that for non-financial firms on HOSE, the
regression results of three proxies for agency costs, namely institutional ownership,
insider ownership, and ownership dispersion provide support for the significant
relationship between agency costs and dividend policies. | en_US |
