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

Quoc Trung Nguyen Kim

International Journal of Procurement Management, 2023, vol. 18, issue 1, 105-123

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. (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijpman:v:18:y:2023:i:1:p:105-123

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