Title: The influence of dividends on investment: evidence from Vietnamese listed firms

Authors: Quoc Trung Nguyen Kim

Addresses: Faculty of Accounting and Auditing, University of Finance – Marketing, 778 Nguyen Kiem, Ward 4, Phu Nhuan District, Ho Chi Minh City, Vietnam

Abstract: The paper aims to estimate the impact of dividends on the investment decisions of listed companies in Vietnam from 2009 to 2019. Agency theory and asymmetric information theory are used to explain the relationship between dividends and investments. These theories are in use in the markets with low information transparency, particularly the Vietnamese stock market. The early financial literature, such as Fama and Miller (1972), has attested that the dividend should not depend on firms' investment; while this study proves the dependence of investment on dividends by employing a quantitative research method (two-stage least-squares - 2SLS). Put in another way, the author discovers that dividends have a statistically significant negative impact on investment. Furthermore, tests of endogeneity and over-identifying restrictions are conducted to determine the validity of instrument variables and the unbiasedness of research results.

Keywords: agency theory; asymmetric information theory; dividends; investment; 2SLS; Vietnam.

DOI: 10.1504/IJPM.2023.132587

International Journal of Procurement Management, 2023 Vol.18 No.1, pp.105 - 123

Received: 08 Oct 2021
Accepted: 12 Mar 2022
Published online: 30 Jul 2023 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article