The role of State ownership in moderating the relationship between gender diversity and dividend payout policy in firms.... The moderating effect of board gender diversity on the relatio
INTRODUCTION
Research background
Empowering women within firms is increasingly recognized as a catalyst for organizational growth Research by Bear et al (2010) indicates that female board members enhance a company's reputation and public image through socially responsible initiatives Additionally, Bennouri et al (2018) found that the presence of women on boards significantly boosts a firm's Return on Assets (ROA) and Return on Equity (ROE) These findings underscore the positive influence of female directors on corporate management and performance.
Research indicates that board gender diversity enhances firm value and competitive advantages, with female board members positively influencing monitoring capabilities and reducing conflicts Their presence fosters stronger connections between leadership and employees, boosting effectiveness and organizational growth (IFC, 2019) A study by Bruce et al (2022) highlights the favorable effects of women's leadership on corporate governance tools like dividend policy Evidence from various studies supports a positive correlation between female board representation and dividend payout policies in markets such as the US (Benjamin & Biswas, 2019; Byoun et al., 2016; Chen et al., 2017) and Malaysia (Tahir et al., 2020) Additionally, Al-Rahahleh (2017) found that gender diversity on boards not only positively impacts dividend policies but also enhances corporate governance quality.
A study by Saeed & Sameer (2017) revealed that in emerging markets like India, China, and Russia, there is a negative correlation between board gender diversity and cash dividend payments This finding contrasts with the results presented in the research conducted by Chen et al.
Research indicates that boards with a higher representation of female members are more inclined to implement higher dividend payouts as a management strategy However, a recent study by Garcia-Meca et al (2022) reveals an inverted U-shaped relationship between female directors and dividend payout policies At low levels of female representation, dividend payments are generally positive, but beyond a certain threshold, the relationship turns negative, likely due to traits commonly associated with women, such as risk aversion and financial prudence.
The capital ownership structure significantly influences a firm's dividend payout policy, as highlighted by various studies (Short et al., 2002; Lin, Chen & Tsai, 2016) This research specifically examines the impact of State ownership on dividend decisions, questioning how varying percentages of State-held shares affect payout strategies Previous findings by Lam et al (2012) indicate that firms with higher State ownership ratios are likely to distribute more cash dividends while offering fewer stock dividends.
State ownership in firms can influence dividend payouts in contrasting ways While some argue that government shareholders may drive firms to enhance their value and increase dividends, others highlight that decisions favoring state interests, particularly in tax matters, can diminish firm value and, consequently, shareholder dividends A study by Musallam & Lin (2019) supports this notion, revealing that firms with higher state ownership ratios tend to offer lower dividends Thus, the effect of state ownership on dividend payout policies can be both beneficial and detrimental.
This study examines the influence of various factors on the dividend payout policy of firms listed on the Ho Chi Minh Stock Exchange (HOSE) from 2012 to 2022 By analyzing data from financial reports, annual reports, and shareholder meeting minutes, the authors aim to develop a model that clarifies the relationship between board gender diversity, state ownership, and dividend policies The research addresses the somewhat contradictory perspectives surrounding these factors, providing empirical evidence to enhance understanding of their impact on dividend decisions within these firms.
Research objectives
In today's corporate landscape, firms communicate their operational efficiency through their dividend payout policies, which are shaped by various internal factors A robust governance system enhances resource utilization and overall firm performance The increasing contributions of women in the corporate sector have drawn significant research interest, particularly regarding board gender diversity, which plays a crucial role in shaping dividend payout strategies Additionally, the composition of capital ownership—whether held by individual investors, organizations, state entities, or foreign investors—also influences the planning of dividend payouts.
This study investigates how board gender diversity and the proportion of state ownership influence the dividend policies of firms listed on the HOSE exchange with state shareholders The authors aim to clarify the research problem by focusing on two key objectives.
1) Determining the proportion of women on the board of directors will change the dividend payout policy.
2) Clarifying the impact of State ownership in a firm on that firm’s dividend payout policy.
To clarify the research objectives, the author poses the following research questions to address:
Board gender diversity significantly influences dividend policy, with its impact being both positive and negative depending on various factors Research indicates that diverse boards may enhance decision-making and lead to more favorable dividend payout decisions, aligning with theoretical frameworks that emphasize the importance of varied perspectives in corporate governance This relationship underscores the role of gender diversity in addressing firm challenges and optimizing financial strategies.
State ownership significantly influences dividend payout policies, potentially altering how firms distribute profits to shareholders Additionally, the presence of state ownership may moderate the relationship between board gender diversity and dividend payouts, suggesting that the composition of a company's board can impact financial decisions in state-owned enterprises Understanding these dynamics is crucial for evaluating corporate governance and financial strategies in firms with varying levels of state involvement.
Research methodology
The group's research focuses on quantitative research, a widely used method for gathering market data in statistical form This approach involves collecting data and analyzing it with specialized software to derive precise conclusions, making it the primary research method for the entire study.
In this study, the authors utilize STATA17, a statistical software, to analyze the model and examine the characteristics of the variables They address any issues with the variables to select the most appropriate regression model for the data and research subject.
The authors will evaluate their hypothesis using three panel data regression techniques: Pooled OLS, Fixed Effects Model (FEM), and Random Effects Model (REM) to determine the most appropriate model for the dataset Additionally, they will employ the Generalized Method of Moments (GMM) to address potential issues such as autocorrelation of residuals, heteroscedasticity, and endogeneity that may arise in the chosen model.
Object and scope of research
The study focuses on firms with State shareholders listed on the HOSE stock exchange in the period from 2012 to 2022.
The research utilizes data gathered from financial reports, annual reports, and shareholder meeting minutes sourced from vietstock.vn and cafef.vn, focusing on companies with State ownership listed on the HOSE Stock Exchange.
The group collected data from 78 firms in the period from 2012 to 2022 that meet the following requirements:
(i) Full audited financial reports accepted from 2012-2022 to increase the reliability of the data series.
(ii) Firms must have State shareholders in the firm's shareholder structure.
(iii) Firms must be in the period 2012-2022 on HOSE.
The novelty of research
Our study highlights the significance of board gender diversity as a moderating variable in the relationship between state ownership and dividend payout policy The findings reveal a negative effect of this moderating variable on dividend payouts, contrasting with Saeed et al (2017), which reported a positive influence of the variable WOSOWN on dividend payout policy.
The characteristics and institutions of developing countries, such as Vietnam, significantly differ from those in developed nations like the United States and Spain, impacting research on gender diversity in boards of directors (BOD).
This study aims to investigate board gender diversity among firms listed on the HOSE Vietnam stock exchange, addressing the limited research available on this topic in developing markets.
The contribution of research
This study examines how board gender diversity and state ownership influence firms' dividend payout policies The findings provide valuable insights for managers to develop dividend strategies that align with their firm's unique circumstances and long-term sustainability goals Additionally, these results offer investors a clearer understanding of dividend planning, enabling them to identify firms that prioritize sustainable development when constructing their investment portfolios.
The study proposes a research model to investigate the effects of board gender diversity and state ownership on firms' dividend payout policies, while also examining the moderating role of these factors in relation to dividend distributions.
The group developed a theoretical framework and model relevant to their research topic, enhancing the validity of their study They supported their findings with empirical evidence from 78 listed firms on the HOSE stock exchange, which strengthened the reliability of their analysis regarding the influence of two key factors on dividend payout policy.
LITERATURE REVIEW
Theoretical basis
Theories surrounding shareholder protection emphasize that dividends serve as a crucial mechanism for safeguarding the interests of all shareholders Regularly paid dividends signal a firm's operational efficiency in the financial market, indicating strong performance (Al-Amarneh & Yaseen, 2014) According to signaling theory, an announcement of increased dividend payments is viewed positively, suggesting favorable prospects that benefit all shareholders, as noted by Miller and Rock.
In 1985, Jensen and Meckling (1976) introduced the agent theory, highlighting how dividend payout policies can influence firm value This theory distinguishes between ownership and management rights, leading to potential conflicts where managers may prioritize personal interests over shareholder benefits To mitigate this issue, Easterbrook proposed strategies to align managerial actions with shareholder goals.
Dividend payments are crucial in mitigating conflicts between managers and shareholders, as they can lower agency costs by decreasing internal consumption By addressing the issue of free cash flow, dividends help align the interests of both parties, thereby enhancing overall corporate governance (Byoun et al., 2016).
Companies often adopt a regular dividend payout policy to convey positive signals to shareholders, indicating strong operational performance and fostering investor trust Additionally, dividends provide shareholders with tax-free income in the short term, making the firm more attractive to potential investors in the capital market However, the absence of dividends does not necessarily indicate poor performance; firms may choose to reinvest retained earnings into projects with positive net present value (NPV), ultimately benefiting shareholders in the long run.
Board gender diversity plays a crucial role in enhancing corporate governance for public firms, prompting legislative bodies to prioritize its increase This focus has led to a notable rise in women's participation on boards of directors (BOD) According to Deloitte's 2022 report, the global average of women in BODs reached 19.7%, while in Vietnam, the figure was 17% in 2020 Researchers have increasingly examined the relationship between board gender diversity and its effects on supervision, monitoring, and decision-making processes (Adams & Ferreira, 2009; Carter, Simkins & Simpson, 2003; European Commission, 2012) Notably, Van Uytbergen & Schoubben (2015) investigated the influence of gender diversity on financial policies among non-financial firms across 14 European Union countries from 2008 onwards.
Research indicates that firms with internal ownership and greater gender diversity on their boards positively influence cash policies A study by Martinez et al (2015) on Spanish companies revealed a significant relationship between board gender diversity and dividend payments, highlighting that increased female representation on boards correlates with higher dividend payout policies Furthermore, Zelechowski and Bilimoria (2014) suggest that promoting board gender diversity enhances organizational efficiency and addresses challenges in communication, human resources, and marketing Consequently, this study posits that board gender diversity will significantly impact the implementation of dividend payout policies for stakeholders.
In state-owned firms, the government acts as both a shareholder and a corporate tax collector, influencing firm value in contrasting ways As a shareholder, the government aims to enhance the firm's value, with studies by Fernandez-Rodriguez et al (2019) and Mafrolla (2019) suggesting that reducing or avoiding corporate taxes can be an effective strategy for this purpose Conversely, as a tax collector, the government seeks to maximize tax revenues to fulfill political objectives, which can adversely impact firm value, as highlighted by Bradshaw et al (2019).
According to signaling theory, state-owned firms in key economic sectors tend to distribute higher dividends to reinforce their market position and highlight operational efficiency However, La Porta et al (2000) argue that these firms often prioritize political objectives over efficiency, leading to significant economic inefficiencies, particularly in countries with centralized governance or inadequate legal protections for shareholders This misalignment contradicts the fundamental purpose of the firm and introduces potential agency costs (Gugler et al., 2003).
Theoretical framework
Agency theory examines the conflicts between shareholders (principals) and managers (agents) due to asymmetric information, which can lead to agency problems and shareholder pessimism about future cash flows To address these issues, Jensen suggested strategies such as modifying dividend policies, restructuring boards, and utilizing debt Specifically, dividend payouts can minimize free cash flow, thereby curbing managerial decisions on unbeneficial investments Grossman & Hart (1980) emphasized that dividend distribution is crucial for reducing free cash flow Additionally, Jensen noted that debt obligations can incentivize managers to limit their discretion, discourage inefficient investments, enhance operational efficiency, and mitigate bankruptcy risks, thereby ensuring legal accountability Al-Najjar & Hussainey (2009) also highlighted that dividend payouts can help reduce conflicts among stakeholders.
From the agency theory perspective, the Board of Directors (BOD) significantly influences a firm's dividend payout policy through effective monitoring (Farinha, 2003) The inclusion of female members on the BOD can enhance operational efficiency by lowering agency costs and safeguarding minority shareholders through diligent oversight (Adams & Ferreira, 2009) Research by Pucheta-Martinez & Bel-Om (2015) and Byoun et al (2016) indicates that board gender diversity is particularly impactful in firms facing substantial agency issues, reinforcing the BOD's role as a primary monitoring mechanism to align the interests of managers and shareholders (Boumosleh & Cline, 2015; Bathala & Rao, 1995) La Porta et al (2000) present contrasting views on the relationship between BOD efficiency and dividend payout policy, suggesting that poorly managed firms may use dividends to signal good governance and reduce future external financing costs However, when board gender diversity is effectively monitoring, firms are less inclined to rely on dividends for reputation building, instead focusing on stringent control and oversight, indicating that BOD composition can serve as a substitute for dividend payout policy in mitigating agency problems.
Companies that promote gender diversity on their boards are likely to exhibit improved governance, leading to enhanced shareholder protection This empowered shareholder base can influence management decisions, encouraging them to prioritize higher dividend payouts instead of pursuing personal financial interests.
The composition of the Board of Directors (BOD) is positively associated with dividend payouts, suggesting that a diverse board can enhance decision-making and control Increased gender diversity within the board brings varied perspectives and ideas, leading to improved effectiveness and potentially mitigating agency problems within the firm (Chen et al., 2014; Adams & Ferreira, 2009; Carter et al.).
Effective boards of directors (BOD) play a crucial role in minimizing agency costs associated with free cash flow by limiting managerial discretion in cash policies (Boubakri et al., 2013) Additionally, research by Jurkus et al (2011) indicates that U.S firms in less competitive markets benefit from higher female director ratios, which correlate with reduced agency costs In economically unstable environments characterized by weak governance and concentrated power, gender-diverse boards can safeguard the rights of minority shareholders (Bathala and Rao, 1995).
State ownership firms can significantly influence representation and decision-making processes According to Berle & Means (1991), such ownership structures may lead managers to prioritize decisions that do not necessarily enhance shareholder value From a taxpayer perspective, the government's motivations can skew towards benefiting the State, which can intensify conflicts between shareholders and managers compared to private firms (Bradshaw et al., 2019; Ben-Nasr, 2015) Additionally, these firms often grapple with conflicting interests between managers and regulatory bodies, as well as divergent goals between ultimate shareholders and politicians (Menozzi et al., 2011).
The stakeholder theory posits that firms must consider the interests of all stakeholders to enhance overall value, as highlighted by Freeman (1984) This theory emphasizes that stakeholders are essential for a firm's existence, providing crucial resources necessary for its success (Galbreath, 2016; Hill & Jones, 1992) Consequently, a firm's dividend payout policy should extend beyond merely maximizing shareholder assets to also encompass the interests of various stakeholders, as noted by Ben-Nasr.
Stakeholders encompass any group or individual that can influence or be influenced by a company's objectives, including shareholders, employees, lenders, consumers, and government entities (Freeman, 1984) Our research highlights that the push for increased female representation on corporate boards, aimed at addressing the free cash flow issue linked to dividend payout policies, primarily originates from shareholder activists and large institutional investors This shift enables firms to better align with the diverse needs of all stakeholders, as noted by Galbreath (2016).
Women on boards of directors (BOD) are known to foster stronger relationships with stakeholders due to their focus on others' needs, as highlighted by Miles et al (2006) Their inherent benevolent traits, ethical behavior, empathy, and adherence to rules and laws (Malik et al., 2021; Sun et al., 2021) contribute to this dynamic Consequently, gender diversity on boards is likely to be more attuned to the dividend demands of minority shareholders.
The government serves as a crucial stakeholder by not only drafting and enforcing laws that ensure firms address the needs of various stakeholders but also by owning a portion or the entirety of certain firms, particularly in emerging economies This ownership is often a strategic approach to tackle social issues, including inefficiencies in state-owned enterprises, corruption, and human rights violations As a stakeholder, the government typically expects higher dividend payments from these firms, as such returns reflect effective cost management and resource utilization Additionally, increasing the representation of women on the Board of Directors and distributing dividends signals the government's commitment to social issues, thereby enhancing its legitimacy in the eyes of the public (Saeed et al., 2016).
The signaling theory posits that dividends serve as a communication tool to inform shareholders about a firm's future earnings potential Rooted in the models developed by Bhattacharya (1979) and Miller & Rock (1985), this theory highlights that dividends convey crucial information regarding a company's profitability Consequently, the announcement of dividends acts as a signaling mechanism that can significantly impact stock prices.
An increase in dividend payouts typically signals financial strength and can positively influence stock prices, while a reduction may lead to declines Only reputable firms can effectively communicate their stability through dividends, as the associated costs can be significant Research by Jensen & Meckling (1976) and Easterbrook (1984) highlights the impact of asymmetric information and agency costs on dividend policy, indicating that managers' equity ownership can shape their decisions Consequently, shareholders often demand higher dividends due to mistrust in management, fearing that funds may be allocated to risky projects rather than those that ensure high returns Ultimately, the rise in dividends is viewed not merely as a shareholder preference but as a strategy to enhance management oversight and prioritize profit maximization.
Firms typically finance their investment opportunities using internally generated funds before resorting to more expensive debt and equity markets, primarily due to asymmetric information (Myers, 1984) Those with lower asymmetric information costs can access more investment opportunities, benefiting from reduced capital costs (Verrechia, 2001) As a result, these firms often prioritize retaining profits, leading managers to adjust the dividend payout ratio for shareholders Subsequently, they explore external capital sources, usually starting with debt, before considering issuing additional shares for financing investment projects Thus, capital structure becomes a critical factor for managers when making dividend payout decisions, as highlighted in the study by García & Herrero.
(2021) also shows that board gender diversity is related to financial leverage and capital structure of the firm.
Empirical evidence and research hypothesis
2.3.1 The relationship between board gender diversity and firm dividend payout policy
Previous research has established both positive and negative correlations between the presence of female directors on boards and dividend payout policies According to agency theory, the board of directors (BOD) plays a crucial role in overseeing these policies, with female directors enhancing board efficiency by minimizing discretionary cost control and safeguarding minority shareholders through improved supervision Studies by Adams & Ferreira (2009) indicate that female directors are more engaged and likely to ascend to supervisory roles compared to their male counterparts Furthermore, increasing gender diversity on boards can enhance decision-making and innovation by broadening the knowledge base within the group Supporting this view, Pucheta-Martinez & Bel-Oms (2015), McGuinness et al (2015), and Byoun et al (2016) highlight the significant influence of board gender diversity on dividend payout policies, particularly in firms facing substantial representation issues, as it mitigates conflicts between internal management and external investors.
The socialization theory of gender, informed by sociological, cognitive, and psychological perspectives, underscores the behavioral differences between men and women, particularly in the context of female directors on boards Research by Kim et al (2013) suggests that women often exhibit greater empathy, receptiveness, and care compared to their male counterparts Furthermore, women's leadership styles are typically more interactive and participatory, enhancing their capacity to navigate ambiguity and uncertainty within board dynamics (Bettinelli et al., 2019) Additionally, women are frequently associated with compassion and a strong adherence to principles and regulations, which not only makes their leadership approach more socially appealing but also attractive to stakeholders (Malik et al., 2021; Sun et al., 2021).
In 2021, research indicated that female directors on corporate boards are more attuned to stakeholder needs, leading shareholders to favor gender diversity in boards This diversity is expected to enhance benefits such as increased payments and higher dividend payouts for investors.
Investor patience varies significantly across countries, particularly in emerging economies, where increasing dividend payouts can be more appealing than waiting for future increases (Breuer et al., 2014) The presence of gender diversity on boards can facilitate this process, as female directors are often more attuned to stakeholders' concerns and can effectively address the needs of impatient investors by advocating for higher dividends (Hillman et al., 2007) Moreover, having women on the board can help mitigate conflicts, foster cohesion, and enhance monitoring mechanisms, such as dividend oversight, ensuring that the interests of various stakeholder groups are adequately represented.
Research indicates a negative correlation between board gender diversity and dividend payout policies, as women are often viewed as less risk-tolerant in corporate investment decisions Female directors may prioritize retaining cash by lowering dividend payouts, thus bolstering cash reserves to mitigate future risks This trend is particularly evident in emerging economies characterized by high uncertainty and weaker governance structures, leading to conservative financial strategies to avoid distress or bankruptcy Additionally, a study by Duong et al (2020) highlights that women's roles on boards, especially in CEO and Chair positions, inversely affect dividend policies, with female Chairs utilizing dividends as a strategic management tool for the firm.
The socialization theory of gender highlights the negative impact of female directors on board dynamics and dividend payout policies, primarily due to differing risk tolerances between genders Research indicates that women are generally more risk-averse and cautious in financial decision-making compared to men (Faccio et al., 2016; Palvia et al., 2015) Studies have demonstrated that women are less likely to invest in high-risk assets and prefer conservative investment strategies (Niessen & Ruenzi, 2007) Furthermore, there is a positive correlation between female participation and cash-holding firms (Adhikari, 2018; Zeng & Wang, 2015), suggesting that companies led by women are inclined to retain cash reserves to manage potential risks, consequently leading to lower dividend payouts Saeed & Sameer (2017) also found a negative relationship between board gender diversity and dividend payout policies in emerging markets, indicating a tendency for women to prioritize internal fund conservation for future investments.
Previous studies have revealed conflicting findings regarding the relationship between women on corporate boards and dividend payout policies This article posits a correlation between gender diversity on boards and dividend payouts, leading to the formulation of the following hypothesis.
H ị : There is a correlation between board gender diversity and dividend payout policy of firms listed on the stock exchange HOSE.
2.3.2 The role of State ownership in deciding to pay dividends at firms
The studies of Chen & Dhiensiri (2009), Wang & Yung (2011), Wang et al
Research by Bradford et al (2011) and Bradford et al (2013) indicates a positive correlation between state ownership and dividend payouts in Chinese firms, as state-owned enterprises can rapidly access external capital Furthermore, their findings reveal that state-owned firms tend to distribute higher dividends compared to private firms, primarily due to restrictions in certain industries that limit dividend payments to shareholders.
The OECD report highlights that BRICS countries exhibit a significantly high state ownership ratio compared to both developed and emerging nations Empirical evidence indicates that firms with state shareholders benefit from favorable credit market conditions and implicit government bailout guarantees during financial crises Research shows that companies with higher state ownership tend to offer increased dividend payouts, which can be attributed to signaling theory; the state aims to reinforce its position in key strategic sectors by demonstrating operational efficiency through higher cash dividends Additionally, other studies suggest that state-owned firms with weak governance may resort to elevated dividend payments as a strategy to attract capital market investors.
Research by Duygun et al (2018) indicates that firms in Indonesia with higher State ownership ratios tend to pay more dividends, as the government views these payouts as a vital revenue source alongside corporate taxes Conversely, Ben-Nasr (2015) found an opposing relationship between State ownership and dividend yield, particularly in countries with investor-unfriendly policies Additionally, Al-Najjar & Kilincarslan (2016) examined the Turkish market from 2003 to 2012 and revealed a significant negative impact of State ownership on firms' dividend payout policies.
Based on the empirical evidence, this study will explore the impact of State ownership on dividend payout policy of firms by proposing the following hypothesis:
H2: There is a positive correlation between State ownership and dividend payout policy of firms listed on the stock exchange HOSE.
2.3.3 The role of State ownership in moderating the relationship between gender diversity and dividend payout policy in firms
In emerging markets, agency theory suggests that conflicts between shareholders and managers are often more pronounced in state-owned firms compared to private enterprises (Ben-Nasr, 2015) These state ownership firms encounter unique challenges that can exacerbate these conflicts.
(1) There is a difference in purpose between managers and regulators (Menozzi et al., 2011).
(2) There are different objectives between ultimate owners and politicians (Menozzi et al., 2011).
State-owned firms are likely to benefit from easier access to credit, which can lead to increased profits and a higher risk of cash embezzlement by managers To address this issue, increasing the proportion of women on boards of directors can enhance dividend payout mechanisms and introduce diverse perspectives that represent various shareholder interests, including those of state shareholders Moreover, for state-owned firms to improve transparency and implement new policies effectively, they should strive to become "Model firms" that exemplify good governance and management Research by Saeed et al (2016) suggests that increasing female representation on boards can boost the dividend payout ratio, enhance the perceived value of state ownership, and strengthen its public presence Therefore, integrating state ownership with board gender diversity is anticipated to positively impact the dividend payout ratio in these firms.
H3: State ownership positively moderates the relationship between gender diversity and dividend payout policy in firms listed on the stock exchange HOSE.
Research gap
After learning about previous studies related to the group's research topic, we believe that previous empirical studies still have some gaps that need to be filled.
First, most researchers pay attention to developed markets or large, potential markets, but pay little attention to small developing countries Garcia-Meca et al
(2022) study the impact of board gender diversity on dividend payout policy in Spain - a country with a developed economy Or in the research article by Saeed & Sameer
(2017) researched gender diversity of the BOD on dividend payout policy in large emerging markets such as India, China, and Russia.
Previous research has primarily concentrated on testing specific hypotheses through empirical data from individual countries, rather than developing hypotheses based on a collective context involving multiple countries For instance, Garcia-Meca et al (2022) examined the relationship between board gender diversity and dividend payout policy using data exclusively from Spanish firms, while Lee (2022) investigated ownership structure and dividend payout policy based solely on evidence from Korea.
Previous studies on dividend payout policy have primarily focused on two factors: board gender diversity and state ownership This separation in research has hindered the ability to assess which factor exerts a stronger influence on a firm's dividend decisions Additionally, the varying effects of board gender diversity on dividend payout policies between state-owned and non-state-owned firms remain unclear.
Previous studies have primarily focused on the effects of board gender diversity and State ownership on dividend payout policies, often neglecting to explore the interplay between these factors Notably, the influence of State ownership on the relationship between board gender diversity and firms' dividend payout policies remains unexamined.
2.4.2 Overcoming the limitations of previous studies
Our group's supplementary research addresses significant gaps in previous studies, making it essential for strategic managers and valuable for future research endeavors By building on earlier findings and acknowledging their limitations, we aim to enhance understanding and provide meaningful insights for both practitioners and scholars.
Our research targets stale ownership firms listed on the HOSE stock exchange in Vietnam, a promising yet relatively underexplored market compared to larger developed or emerging markets.
Endogeneity testing is essential for accurate estimation methods, yet it is often overlooked in many studies To address this gap, our research adopts the GMM regression approach outlined by Saeed & Sameer (2017) to effectively manage the endogeneity issues present in the model.
Our group addresses a critical gap in understanding how State ownership impacts the relationship between board gender diversity and firms' dividend payout policies The authors have developed a new research hypothesis to investigate the role of State ownership in moderating this relationship.
RESEARCH METHODOLOGY
Data and sample selection
The research uses data taken from audited consolidated financial Statements of firms listed on the Ho Chi Minh Stock Exchange (HOSE) in the period 2012-2022.
The dividend payout policy and various financial indicators are sourced from the annual reports and minutes of the Annual General Meeting of Shareholders of the firms in the research sample, and this data is compiled on the websites vietstock.vn and cafef.vn.
To ensure the highest accuracy, consistency, and reliability in research, a data sample was meticulously compiled from 78 state-owned firms listed on the HOSE.
This study excludes firms from the financial industry, including banks, investment funds, insurance companies, and real estate firms, as their unique characteristics are not relevant to the research focus Consequently, the accounting practices and financial statement indicators associated with these sectors are not applicable to the analysis.
We exclude companies with incomplete or inconsistent data, as well as those that ceased operations during the research period Additionally, firms that were newly listed within the last 10 years prior to the study are also omitted from the research sample.
• Finally, the data sample also eliminates observations with erratic increases and decreases in variables to achieve reliability as well as provide the best objectivity.
Model specification
This research paper investigates the relationship between board gender diversity, state ownership, and dividend payout policy in listed firms on the Ho Chi Minh City Stock Exchange (HOSE) from 2012 to 2022 Utilizing a research model inspired by Jabbouri (2016) and Saeeda & Sameer (2017), the study employs a regression model to analyze empirical evidence in this context.
DIVlit = po + PiWOit + IhSOWNit + PaSIZEit + p4ROAit + p5SGit + pôLEVit + P?CEODit + Eit
• i = l, ,n is the index representing the number of firms.
• t = I, ,t is the index representing time.
• DIV 1 is the dividend payout policy, measured by total dividends on total assets.
• WO is board gender diversity, measured as the number of female members to the total number of board of directors members
• SOWN is the State ownership, measured by the number of shares held by the State compared to the total number of outstanding shares.
• SIZE is the firm size, calculated as the logarithm of total assets.
• ROA represents a return on assets and is calculated as net income by total assets.
• SG is the sales growth and is determined by the increase or decrease of sales in year T compared to year T-1.
• LEV is a financial leverage, calculated as total debt divided by total assets.
CEOD, or CEO duality, refers to the situation where an individual holds both the positions of chairman of the board and CEO within a company This dual role is represented as a dummy variable in the model to mitigate common endogeneity issues that can develop over time.
• 8 is the random error in a combined time and space series.
To validate hypotheses H1, H2, and H3 and ensure consistency in the research findings, Model (2) was developed by incorporating a moderating variable, the interaction of two independent variables (WO*SOWN), into Model (1) This moderating variable reflects the influence of state ownership on the relationship between board gender diversity and dividend payout policy.
DIVlit = Po + piWOit + p2SOWNit + pjWOSOWNh + p4SIZEit + PsROAit + póSGit + pĩLEVit + psCEODit + Eit
This study builds upon the findings of Garcia-Meca et al (2022) by conducting robustness tests to validate previous hypotheses It introduces model (3), which replaces DIV1 with DIVE, measured as total dividends relative to total equity, as proposed by Benlemlih (2019) in model (2).
DIVEit = po + piWOit + piSOWNit + p3WOSOWNit + p4SIZEit + psROAit + PóSGit + p7LEVh + PsCEODit + Sit
Variable measurement
We employ two methods to assess the dependent variable of dividend payout policy, drawing on prior research in the field The first method is the dividend payout ratio (D1V1), defined as total dividends divided by total assets, which, according to Sheikh et al (2021), reflects a strong correlation between dividend payments and firm size, while remaining unaffected by financial statement manipulation or stock market shocks The second method is the dividend payout ratio (DIVE), calculated as total dividends divided by total equity The following equations will provide a clearer insight into our calculation methods.
• DIV I = (Total dividends/Total assets)
• DIVE = (Total dividends/Total equity)
3.3.2 Independent variable and dummy variable
Our primary independent variable is board gender diversity (WO), which is defined as the ratio of female members to the total number of board directors (Byoun et al., 2016; Chen et al., 2017; Pucheta-Martinez & Bel-Oms, 2015; Saeed & Sameer, 2017; Sila et al., 2016) We will gather this data from the annual reports of various firms over a span of 10 years.
• WO = (The number of female members)/(The total number of board of directors members)
State ownership (SOWN) is evaluated by the proportion of shares held by the government relative to the total number of outstanding shares, as highlighted in studies by Bradshaw et al (2019), Tran Thi Tuan Anh (2016), and Al-Malkawi et al (2013).
• SOWN = The number of shares held by the Stale / The total number of outstanding shares
CEO duality is a key variable that indicates whether the chairman of the board also holds the position of CEO, thereby affecting the management board's independence in strategic decision-making (Curea et al., 2022) This variable is represented as a dummy variable, assigned a value of 1 when the chairman also serves as CEO, and 0 when the chairman does not assume this dual role.
Recent empirical studies and key literature on dividend payout policy, including works by DeAngelo et al (2006), Denis and Osobov (2008), Dewasiri et al (2019), and Kuo et al (2013), highlight a variety of significant factors that impact dividend payout decisions.
Firm size, measured by the logarithm of total assets, is a crucial factor influencing dividend payout policy (Harakeh, Lee & Walker, 2019) Research indicates that larger firms tend to have higher and more stable dividend payments According to Yusof and Ismail (2016), agency cost theory suggests that widespread ownership in large firms complicates shareholder oversight of financial and investment activities, leading to increased information asymmetry and agency costs Consequently, implementing an effective dividend policy can help mitigate these challenges.
The decision to pay dividends starts with profits When firms are profitable they are expected to generate more free cash and pay higher dividends (Benlemlih, 2019).
Return on assets (ROA), defined as net income divided by total assets, is a critical factor influencing a firm's dividend distribution decisions (Bilinski & Lyssimachou, 2018) Lintner's (1956) foundational study established that net income significantly impacts changes in dividend payout policy The pecking order theory suggests that less profitable firms struggle to maintain optimal dividend payouts due to the costs associated with debt and equity financing Conversely, firms with higher profitability are more inclined to distribute dividends and generate retained earnings for investment purposes Fama & French (2001, 2002) supported this theory, demonstrating a positive correlation between profits and dividends, indicating that optimal dividend payments may signal future profitability (Bhattacharya, 1979; Miller & Rock).
Firms that consistently generate stable and increasing profits are perceived positively by investors, leading to an increase in firm value Consequently, higher profits contribute to enhancing overall firm value (Chen & Steiner, 2000; Iturriaga & Sanz, 2001).
Research indicates a strong link between investment decisions and dividend payouts, with firms that possess high growth potential typically maintaining lower cash reserves and thus paying minimal or no dividends This aligns with the hypothesis proposed by Myers and Majluf (1984), suggesting that a firm's growth expectations and investment opportunities, measured by year-over-year sales growth, significantly affect its dividend policy (Deshmukh, 2003; Aivazian et al., 2003; Adjaoud & Ben-Amar, 2010) According to life cycle theory, mature firms are less inclined to accumulate cash reserves due to their low growth and limited capital expenditures, enabling them to adopt a shareholder-friendly dividend policy Conversely, younger firms prioritize accumulating reserves to support rapid growth, resulting in lower dividend payouts (Badu, 2013) Additionally, agency cost theory posits that firms with limited growth and investment opportunities face agency costs related to free cash flow, prompting them to distribute higher dividends compared to their high-growth counterparts (Jensen, 1986).
Numerous studies indicate that financing decisions significantly influence a firm's dividend payout policy, highlighting a correlation between dividend policy and financial leverage, defined as total liabilities relative to total corporate assets When firms raise funds from capital markets, this often incurs fixed financial obligations such as interest and principal payments, with the risk of bankruptcy looming if these obligations are unmet (Brawn & Sevic, 2018) Consequently, high financial leverage typically results in lower dividend payments, as firms prioritize maintaining internal cash flow to fulfill their obligations over distributing cash to shareholders (Adjaoud & Ben-Amar, 2010) Additionally, Rozeff (1982) notes that firms with elevated financial leverage usually adopt lower payout ratios to minimize transaction costs linked to external financing.
Method of analysis and data processing
3.4.1 Regression methods in previous studies on dividends
To effectively address the research questions, the team must utilize regression methods suited to the data's characteristics A key approach is to build upon findings from prior studies For instance, Al-Najjar et al (2016) employed REM and FEM regression methods to explore the impact of gender diversity on dividend payout policy, while Saeed et al (2017) applied GMM regression to address endogeneity within their research model Additionally, a study by Vo further contributes to this body of knowledge.
(2015) on dividend payout policy also chose GMM regression to answer the research questions raised.
3.4.2 Analysis steps and data processing
The research uses two software including STATA and EXCEL to analyze data based on models built by the team The analysis steps are presented below:
Step 1: Descriptive statistics, correlation matrix and VIF test
The filtered data set, derived from a reliable source, will be summarized to highlight key characteristics such as the number of observed variables, mean value, standard deviation, minimum, and maximum values This descriptive statistics process enables the research team to assess the statistical distribution properties of the variables by analyzing parameters that measure data variability and dispersion.
The correlation matrix analysis allows the research team to assess the strengths and weaknesses of relationships between variable pairs in the model A high absolute correlation coefficient (exceeding 0.8, as noted by Hair et al., 2010) indicates potential multicollinearity issues Additionally, the sign of the correlation coefficient helps researchers predict the uncertain effects of each independent variable on the dependent variable.
The VIF coefficient serves as an effective tool for assessing multicollinearity among independent variables, with a VIF value of less than 10 indicating the absence of multicollinearity, as established by Hair et al (2010).
Step 2: Consider regression methods suitable for panel data
According to Brooks (2014), the research team will initially utilize the generalized regression method (POLS) for their analysis However, since POLS may not be the most effective approach for panel data, the researcher will also explore two alternative methods: the Fixed Effect Model (FEM) and the Random Effect Model (REM).
The research team utilized the F-test to determine the most suitable model between POLS and FEM, with the null hypothesis (Ho) suggesting that POLS is preferable over FEM Conversely, the alternative hypothesis (Hl) indicates that FEM is superior to POLS Additionally, the Lagrange Multiplier test (LM test) was employed to compare POLS and REM, where Ho posits that POLS is the better model, while Hl suggests REM is more appropriate If both FEM and REM are found to be more suitable than POLS, the Hausman test is conducted to choose between these two methods, with Ho indicating that the REM model is appropriate; rejecting Ho signifies that the FEM model is the better choice.
Step 3: Check the model for defects
After selecting the suitable regression method, the research team will conduct tests to detect any remaining flaws in the research model Depending on the chosen regression technique, potential model defects may include heteroskedasticity and autocorrelation among residuals.
The thesis employs the Wald Test, as developed by Greene (2000), to assess heteroskedasticity This test evaluates the null hypothesis (Ho) that the residual variance remains constant against the alternative hypothesis (Hl) which posits that the residual variance varies.
The autocorrelation test evaluates the relationship between current and previous observations, utilizing the Woodridge (2002) test The null hypothesis (Ho) posits that the model is free from first-order autocorrelation, while the alternative hypothesis (Hl) indicates the presence of first-order autocorrelation in the model.
Step 4: Fix model defects (if any)
If tests reveal persistent defects in the chosen regression method, the research team will adopt the GMM regression method to address these issues, particularly endogeneity Previous studies have highlighted the significant consequences of endogeneity, notably its ability to alter the sign of coefficients and diminish their statistical significance, which can mislead researchers regarding the problems that require attention Once the GMM regression meets the criteria for instrumental variables and passes second-order autocorrelation tests, the results will be deemed reliable for drawing final conclusions.
Step 5: Present and discuss research results
The research team examined the statistical significance and sign of each regression parameter to discuss the research results in accordance with theories and previous empirical studies.
Description of variables in the research model
Table 3.1: Description of variables in the model
Symbol Define Measurement Previous research
(Total dividends/Total assets) (Total dividends/Total equity)
Independent variables wo Board gender diversity
The number of female members/The total number of board of directors members
Number of shares held by the State/Total number of outstanding shares
SIZE Firm size Log(Total assets) Bilinski &
Net income/Total assets Bilinski &
Harakeh, Lee and Walker (2019) Benlemlih (2019)
(Net revenue in year T - Net revenue in year T-1 )/Net revenue in year T-1
Total liabilities/Total assets Bilinski and
A dummy variable is utilized to indicate whether a firm has a chairman of the board who also serves as the CEO, assigning a value of 1 in such cases Conversely, it takes a value of 0 when the chairman does not hold a concurrent role as CEO.
RESEARCH RESULT
Descriptive statistics and correlation matrix
Variable Obs Mean Std Dev Min Max
Source: Data processed using Stata Ỉ 7 software
Table 4.1 showcases the descriptive statistics for the dependent variable of dividend payout policy alongside independent variables such as board gender diversity and state ownership, including various control and dummy variables The data was gathered from a substantial sample of listed companies on the Ho Chi Minh City Stock Exchange (HOSE) covering the period from 2012 to 2022.
DIV1 ranges from a minimum of 0 to a maximum of 0.6414, representing 64.14% This suggests that the maximum cash utilized by companies for dividend payments can occasionally surpass 50% of the firm's total assets.
SOWN and wo have similar observed values, standard deviations, maximum,and minimum values, but their average values are completely different.
The moderating variable Return on Assets (ROA) shows a significant range, with a minimum of -0.483 and a maximum of 0.7168 The average SIZE is 3.263, accompanied by a standard deviation of 0.589 Sales Growth (SG) exhibits a wide variation, with values from -1.039 to 22.162, highlighting substantial revenue advancements for firms compared to the previous year Additionally, Leverage (LEV) ranges from 0.0298, indicating minimal debt financing, to 0.9706, suggesting firms that are fully financed by debt.
The descriptive statistics of the variables in the model in Table 4.1 also mention the dummy variable CEOD, with a standard deviation of 0.358 and an average value of 0.151.
DIV1 WO SOWN SIZE ROA SG LEV CEOD
Source: Data processed using Stata 17 software
The correlation matrix in Table 4.2 reveals significant relationships among the variables in the research study Notably, wo exhibits a negative correlation with DIV1, while SOWN shows a positive correlation with DIV1 Additionally, SIZE and LEV are both negatively correlated with DIV1 Return on assets (ROA) demonstrates a positive correlation with DIV1, whereas revenue growth (SG) has a negative correlation with DIV1 Furthermore, the CEO duality variable (CEOD) also presents a negative correlation with DIV1.
Multicollinearity can arise in a regression model when the correlation coefficient between independent variables falls outside the range of -0.8 to 0.8 (Hair et al., 2010) The correlation matrix results presented in Table 4.2 indicate that most variables in the model remain within this acceptable range Consequently, the authors conclude that significant multicollinearity is not present among the independent variables in the model.
Test of Multicollinearity
Source: Daia processed using Stata 17 software
The Variance Inflation Factor (VIF) is a key metric used to assess multicollinearity in a statistical model A VIF value exceeding 2 suggests potential multicollinearity, while a value over 10 strongly indicates its presence Conversely, a VIF below 2 signifies the absence of multicollinearity According to the results presented in Table 4.3, the analysis confirms that there is no multicollinearity in the model.
Research results
4.3.1 Research results of regression methods
In this study, the author employs panel data regression techniques, including Pooled Ordinary Least Squares (Pooled OLS), Fixed Effects Model (FEM), and Random Effects Model (REM) The author then compares these models to identify the most suitable regression approach, utilizing the Hausman test to differentiate between the FEM and REM To ensure the robustness of the chosen model, the author assesses potential issues such as heteroskedasticity, autocorrelation, and endogeneity If any defects are identified, the Generalized Method of Moments (GMM) is implemented to address these concerns effectively.
Table 4.4: The result of the Pooled Ordinary Least Squares (OLS) regression model
Source: Data processed using Stata 17 software
Table 4.5: Results of FEM and REM regression models
DIVl Coefficient p-value Coefficient p-value
_cons 0.0956443 0.001 0.0541877 0.001 p-value (F-test) 0.0000 p-value (LM-test) 0.0000 p-value (Hausman test) 0.0000 0.0000 p-value (Wald test) 0.0000 p-value (Wooldridge test) 0.2038
Source: Data processed using Stata 17 software
The regression results for model (1) are detailed in Tables 4.4 and 4.5, showcasing the Pooled OLS, Fixed Effects Model (FEM), and Random Effects Model (REM) The F-test indicates that the FEM regression model significantly outperforms the Pooled OLS model, with a p-value of less than 0.05 Additionally, the Lagrange Multiplier (LM) test reveals that the REM model is also superior to the Pooled OLS model, again with a p-value of less than 0.05 To select the most suitable model between FEM and REM for the regression analysis, further evaluation is necessary.
Study utilizes the Hausman test and the results of the test show that p-value < 0.05 Therefore, the FEM method is more suitable than the REM method.
The author confirms the suitability of the Fixed Effects Model (FEM) for model (1) and tests for heteroscedasticity using the Wald test, which reveals significant heteroscedasticity with a p-value < 0.05 In contrast, the Wooldridge test for autocorrelation yields a p-value > 0.05, indicating no autocorrelation present To resolve the issues of heteroscedasticity and endogeneity, the authors employ the Generalized Method of Moments (GMM) regression method for model (1).
4.3.2 The impact of a board gender diversity and State ownership on dividend payout policy
Table 4.6: The impact of a board gender diversity and State Ownership on dividend payout policy - GMM method
Source: Data processed using Stata Ỉ 7 software
The GMM regression results indicate that the wo variable is statistically significant at the 1% level (p-value = ()()()()), demonstrating a positive impact on the DIV 1 variable This suggests that companies with greater gender diversity on their boards of directors tend to pay higher dividends to shareholders Research by Chen et al (2017) and Al-Amarnel et al (2017) supports this finding, indicating that gender diversity enhances the implementation of dividend payout policies Female board members are better equipped to understand and meet investor needs, particularly in emerging markets where investors may lack patience This aligns with previous studies by Farinha (2003), Hu and Kumar (2004), Pucheta-Martinez and Bel-Oms (2015), McGuinness et al (2015), and Byoun et al (2016) Overall, the results provide strong evidence for hypothesis H1, suggesting that increased gender diversity on boards leads to higher dividend payouts, with female directors utilizing dividend payments as a monitoring tool to enhance firm management.
The analysis of the variable SOWN reveals that firms with State shareholders exhibit a significantly high dividend payout ratio, supported by a positive coefficient at a 99% confidence level This finding aligns with previous studies, including those by Chen & Dhiensiri (2009) and Wang et al (2011), which also highlight the positive relationship between State ownership and dividend policy Research by Bradford et al (2013) further indicates that shareholders benefit from increased dividend payments in State-owned firms Glen et al (1995) explain that State ownership plays a crucial role in dividend decision-making, particularly in environments with limited shareholder protection, as the State can influence internal shareholders to distribute cash Additionally, signaling theory suggests that the State may implement high dividend payouts to enhance its image and strengthen its economic position However, studies indicate that State-managed firms often suffer from weak governance, leading to high dividend policies as a means to project strong performance (La Porta et al., 2000) In Vietnam, research by Duong et al (2020) suggests that State-owned firms increase dividend payments due to easier access to external funding, thereby reducing agency costs Overall, these findings provide compelling statistical evidence of a positive correlation between State ownership and dividend payout policy, indicating that firms with State shareholders generally offer higher dividends than their privately owned counterparts.
The regression analysis from model (1) utilizing the GMM method offers compelling evidence to validate hypotheses H1 and H2 This supports the notion that increased gender diversity on corporate boards and a substantial level of state ownership contribute to enhanced dividend payout policies among publicly listed companies on HOSE from 2012 to 2022.
This study not only investigates the substantial effects of independent variables but also explores the influence of other financial factors on firms' dividend payout policies The findings are detailed in Table 4.6.
The regression analysis indicates a statistically significant positive relationship between firm size and the stability of dividend payout policies, particularly at the 1% level This suggests that larger firms are more likely to provide consistent dividends to shareholders, as they are generally in a phase of sustainable development and prioritize profit distribution over retention Consequently, large firms can effectively mitigate agency problems by paying dividends, as noted by Jensen & Meckling (1976) and others In contrast, small firms face challenges in implementing dividend policies due to limited access to external funding, often incurring higher costs when they do obtain financing This limitation restricts their ability to distribute dividends, aligning with findings from Yusof & Ismail (2016) that larger firms tend to offer higher and more stable dividends compared to their smaller counterparts.
The return on assets (ROA) significantly influences dividend payments (DIV1) at a 1% significance level, with a regression coefficient of 0.4967 This indicates that a one-unit increase in the efficiency of total asset utilization to generate net profit leads to an increase in dividend payments by 0.4967 units A high ROA reflects effective asset management, signaling to shareholders that the firm is performing well, which boosts shareholder confidence and attracts investors in the capital market These findings align with previous research (Benlemlih, 2019; Chen & Steiner, 2000; Iturriaga & Sanz, 2000; Fama & French, 2002), and in Vietnam, Hung et al (2018) also found a positive correlation between ROA and the dividend payout policy of listed firms.
Sales growth (SG) negatively affects dividend payout policy, though this impact is not statistically significant, with a p-value of 0.226, exceeding the 5% significance level This finding aligns with prior studies indicating that firms with strong investment potential often reduce cash reserves to fund growth, leading to lower or non-existent dividends (Deshmukh, 2003; Aivazian et al., 2003; Adjaoud & Ben-Amar, 2010) The negative correlation can be attributed to managers prioritizing investment opportunities during growth phases, which prompts them to reinvest profits and increase retention rates, thereby decreasing dividend payouts Additionally, research by Hung et al (2018) on Vietnamese firms supports the notion that growth rates negatively influence dividend payout policies, as evidenced by their FGLS regression model analysis.
The variable LEV shows a statistically significant negative correlation with DIV1 at the 1% level, indicating that firms with higher leverage typically have lower dividend payouts This is primarily because such firms must prioritize maintaining internal cash flow to meet debt obligations over distributing dividends to shareholders (Adjaoud & Ben-Amar, 2010) Additionally, high leverage increases bankruptcy risk and raises the cost of external funding, leading firms to rely more on retained earnings, thus decreasing their dividend policies (Huff & Dufrene, 1996) Furthermore, the obligation to repay debt from future cash flows restricts surplus cash, reducing the likelihood of management misusing funds for personal purposes instead of paying dividends, which ultimately enhances management discipline and lowers agency costs (Jensen, 1986).
4.3.3 The moderating effect of board gender diversity on the relationship between State ownership and the dividend payout policy of firms
Table 4.7: The moderating effect of board gender diversity on the relationship between State ownership and dividend payout policy of firms - GMM method
Source: Data processed using Stata 17 software
Model (2) incorporates the interaction variable between wo and SOWN, building on the foundation of Model (1) Utilizing the GMM method for regression, as confirmed by the testing steps from Model (1), Table 4.7 reveals that both wo and SOWN significantly influence DIV1 at a 1% significance level This reinforces the conclusion that increased board gender diversity correlates with higher dividend payouts to shareholders, and that firms with state ownership are more inclined to distribute greater dividends compared to privately listed firms on HOSE from 2012 onward.
2022 Additionally, the control variables SIZE, ROA, SG, LEV, and the dummy variable CEOD still have the same impact on DIV1 as observed in the regression results of Model (1).
The findings from Table 4.7 reveal that board gender diversity significantly impacts the dividend payout policy of State-owned firms, with a statistically significant negative coefficient for WOSOWN at the 1% level This indicates that increased gender diversity on boards correlates with reduced dividend payouts, contrasting with Saeed et al (2017), which argued that such diversity alongside State ownership enhances dividend ratios in BRIC firms In Vietnam, research on this topic is limited; however, agency theory suggests that conflicts between shareholders and managers are more pronounced in State-owned enterprises, necessitating greater board gender diversity to improve governance and potentially increase dividend payouts Duy's (2022) study further supports this, highlighting a positive influence of State ownership on dividend policies and suggesting that greater female representation on boards can enhance dividend payouts in State-owned firms listed on the Vietnamese stock market.
The study builds on Duy (2022) by revealing a negative correlation between the implementation of dividend payout policies and board gender diversity among companies listed on the Ho Chi Minh City Stock Exchange (HOSE) during the year 2012.
In 2022, state-owned firms often adopt high dividend payout policies to attract investors and signal financial health; however, these payouts have a threshold beyond which they can negatively influence female directors' decisions Research by Saeed et al (2017) highlights that in emerging economies like Vietnam, female board members tend to exhibit a conservative mentality and lower risk tolerance compared to their male counterparts This conservative approach is driven by the legal and institutional risks associated with the market, prompting female directors to prioritize low-risk decisions and maintain substantial cash reserves to safeguard against potential future uncertainties.
Table 4.8: Summary of GMM regression results for model (1) and model (2)
Source: Data processed using Stata 17 software
4.3.4 Robustness test - The moderating effect of board gender diversity on the relationship between State ownership and the dividend payout policy
Table 4.9: The moderating effect of board gender diversity on the relationship between State ownership and dividend payout policy - Robustness test
Source: Data processed using Stata 17 software