Title: Foreign ownership and dividend policy - the case of Vietnam

Authors: Xuan Vinh Vo

Addresses: University of Economics, Ho Chi Minh City, Vietnam; CFVG Ho Chi Minh City, 279 Nguyen Tri Phuong Street, District 10, Ho Chi Minh City, Vietnam

Abstract: The paper investigates the relationship between foreign ownership and dividend policy of firms in the Vietnam stock market. In other words, we attempt to shed light on the following questions: 1) Are foreign investors in Vietnam stock markets more likely to choose firms that pay high dividends?; 2) Do foreign investors cause firms to increase dividends when they have substantial shareholdings in Vietnamese firms? We use a rich and detailed data set, including both market data and firm attributes from 2007 to 2012. We employ a wide range of econometric techniques for panel data analysis including fixed effects and random effects. We further use the GMM estimator to address the bias due to the endogeneity and other biases of least squared estimators. We find that foreign investors in Vietnam prefer to invest in firms that pay low dividend and when become a larger shareholder, foreign investors tend to force firm managers to pay fewer dividends and retain higher income to exploit future emerging market opportunities.

Keywords: foreign ownership; firm attributes; dividends; dividend payout; dividend yield; dividend policy Vietnam; foreign investors; stock markets; econometrics; panel data analysis; emerging markets.

DOI: 10.1504/IJBAAF.2015.077001

International Journal of Banking, Accounting and Finance, 2015 Vol.6 No.2, pp.73 - 86

Accepted: 24 Jun 2015
Published online: 17 Jun 2016 *

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