Triangle relationships among ownership structure, dividend policy and firm performance: An empirical study in Vietnamese companies

Abstract

This paper studies the triangle relationships among ownership structure, dividend policy and firm performance by investigating 34 Vietnamese companies in Construction and Construction Material industries which are listed on Hanoi Stock Exchange, Ho Chi Minh Stock Exchange, and UPCOM Stock Exchange over the period from 2011-2013. The paper studies ownership concentration, dividend payout ratio, and two measures of firm performance, namely Price to Earnings (P/E) ratio and Return on Asset (ROA). Pooled Ordinary Least Squares Model and Fixed Effect Model were used to examine three relationships between: (i) ownership concentration and dividend policy, (ii) dividend policy and firm performance, and (iii) ownership concentration and firm performance. Ownership concentration is found to increase the level of dividend payout. Dividends are positively correlated with both P/E ratio and ROA. Finally, ownership concentration is found to have negative impacts on P/E ratio but no significant impacts on ROA.