The Effect of Dividend Payment on Firm’s Financial Performance: An Empirical Study of Vietnam

Abstract

This research aims to investigate the effects of dividend policies on a firms’ financial performance. The paper explores the research gap and then builds a research model using ROA, ROE, and Tobin’s Q as dependent variables, dividend rate and decision of dividend payment as independent variables. The paper collected data and financial statements of 450 firms that are listing on the stock market of Vietnam from 2008 to 2019. The analysis results indicate that the decision of dividend payment has negative impact to Vietnamese firms measured by accounting-based performance but this improve market expectation on firms. In addition, the paper finds that Vietnamese firms are offering low dividend rate which has a positive impact on accounting-based performance but a negative effect on market expectation. This paper proposes some instructive recommendations based on the findings, including a more appropriate model of dividend policies, a lower dividend rate, and clear decision of dividend payment.