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Impact of Board Characteristics and State Ownership on Dividend Policy in Vietnam

Author

Listed:
  • Dang-Khoa Duong

    (Faculty of Finance and Banking, Ton Duc Thang University, Ho Chi Minh City, Vietnam)

  • Thi Thanh-Phuong Phan

    (Faculty of Finance and Banking, Ton Duc Thang University, Ho Chi Minh City, Vietnam)

  • Kim-Hung Pho

    (Fractional Calculus, Optimization and Algebra Research Group, Faculty of Mathematics and Statistics, Ton Duc Thang University, Ho Chi Minh City, Vietnam)

  • Michael McAleer

    (Department of Finance, Asia University, Taiwan)

Abstract
The relationship between board characteristics and state ownership on dividend policy has been carefully examined in the literature in developed and emerging markets. This paper would seem to be the first to analyse the impacts of board gender diversity and state ownership in the Vietnam market for the following: (1) the number of female directors on the boards of directors is about 25%, which is the highest among South-East Asian countries; and (2) Vietnam has not fully transformed into a market economy, so the state ownership in the listed firm is apparent. Therefore, it is worth trying to examine the impacts of board gender diversity and state ownership on dividend policy in Vietnam. This paper illustrates that the female CEO and female CEO duality decrease the dividend ratio, while chairwomen tend to use dividend ratio as a tool to manage the company. Moreover, Boards of Directors (BODs) with more than three female members usually decrease the dividend payout ratio. The empirical findings are consistent with agency theory, as managers increase payouts to reduce free cash flow and agency costs in firms. The results also indicate that there is an inverse relationship between state ownership and the dividend payout ratio. It is due to higher state ownership allows firms to access external debts easily, so these firms pay high dividends to reduce agency costs. Moreover, governments perceive dividends from holding capital in listed firms as a source of revenue for the state budget. Therefore, firms with higher state ownership are more likely to increase dividend payouts.

Suggested Citation

  • Dang-Khoa Duong & Thi Thanh-Phuong Phan & Kim-Hung Pho & Michael McAleer, 2020. "Impact of Board Characteristics and State Ownership on Dividend Policy in Vietnam," Advances in Decision Sciences, Asia University, Taiwan, vol. 24(4), pages 1-34, December.
    • Handle: RePEc:aag:wpaper:v:24:y:2020:i:4:p:1-34
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    References listed on IDEAS

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    More about this item

    Keywords

    Dividend policy; State ownership; Female CEO and duality; Board gender diversity.;
    All these keywords.

    JEL classification:

    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • K38 - Law and Economics - - Other Substantive Areas of Law - - - Human Rights Law; Gender Law; Animal Rights Law
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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