The effect of financial leverage on dividend policy - Evidence from listed firms in HOSE between 2010 and 2016
Anh, Nguyen Thi Van
MetadataShow full item record
In such a complex corporate environment, it is a formidable challenge for finance managers of any firms in the long run to pursue the prime objective, which is maximizing the owners’ wealth. With the view to achieve this goal, finance managers have to put the due attention on the capital structure of the firms. The optimum capital structures of any firms must lead to the enhancement of the level of profitability. This paper investigates the impact of financial leverage on the dividend policy as regards the listed Vietnamese firms on Ho Chi Minh Stock Exchange. In fact, there are 218 firms included in the experiment during the period of seven years (2010-2016). The empirical outcome reveals that there is a significant negative relationship between financial leverage, measured by the debt ratio, and dividend payment of any firms, indicating that the higher the level of debt, the lower the dividend pay-out ratio. This finding also concurs with the notion suggested by the Pecking order theory and is consistent with previous studies in the context of Vietnam and other countries. In addition, some explanatory variables also have positive/negative relationships with dividend payment, apart from the revenue growth of firms.