EFFECTS OF DIVIDEND POLICY ON BUSINESS PERFORMANCE OF THE COMPANIES LISTED ON HO CHI MINH CITY STOCK EXCHANGE

Abstract

Dividend policy is one of the three important financial policies of joint-stock companies, therefor, studying the impact of dividend policy on business performance can help the companies to have a scientific basis for making decisions on their dividend distribution. The authors use quantitative research methods including descriptive statistics, correlation analysis and Heckman's two-step process to study the impact of dividend policy on the business performance of the companies listed on the Ho Chi Minh City Stock exchange. On the basis of analyzing 151 companies in the 2016-2019 period, the authors found that the companies paying large cash dividends would increase the company's business
performance. In addition, expanding the company's size would help to increase the efficiency of production and business activities, however, a lot of debt would reduce the efficiency of production and business. Research results show that agency cost theory, free cash flow hypothesis and signaling theory would explain dividend policy well in Vietnam market.