Firm Valuation, Capital Access and Transparency Effects of Dividend Distributions: An Emerging Market Story

This paper investigates the impact of the relative ease of capital access and firm’s information transparency on the relationship between dividend cash payment and firm valuation using a panel data of Vietnamese firms. Several firms in Vietnam are stateowned enterprises (SOEs) that enjoy benefits, such as easier access to external capital at a lower cost, when compared to non- SOEs. We find that there is a significant and positive relationship between firm valuation and dividend cash payments. In addition, the same amount of increase in dividend payment is associated with a higher amount of increase in firm value for firms that have less access to external capital or have lower information transparency than for firms with better access to capital or in firms with more information transparency.