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Understanding a behaviour of dividend payout policy in Vietnam from various financial models

By Dang Huu Loc (VNP 19)

Supervisor: Dr. Vo Hong Duc

Abstract

This study is conducted to examine and understand a behavior of dividend payout policy at Vietnam’s listed firms for the period from 2007 to 2013. In doing so, the four well-known models are adopted, known as: (i) the partial adjustment model, (ii) the partial adjustment model under an adaptive expectations hypothesis (the Waud model), (iii) the partial adjustment model under a rational expectations hypothesis, and (iv) the earnings trend model. Key findings obtaining from this empirical study are as follows. First, the empirical results reveal that managers are more concerned of cutting dividends than raising dividends. Second, listed firms in Vietnam are very flexible to change the dividend policies. Third, the absence of institutional shareholders in the firms will significantly decrease the level of dividend payouts. Fourth, the findings also confirm that the adaptive expectations hypothesis is more appropriate than the rational expectations hypothesis in explaining the dividend behavior for the emerging markets, in particular for Vietnam, regardless of the presence or absence of the institutional ownership in a firm.

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