Dividend policy and share price volatility: empirical evidence from Vietnam

). 
Fig. 2 . The relationship DYield, DPayout and PVol 
6. Discussion and recommendations 
6.1 Discussion 
Firstly, the regression results show that the dividend payment ratio is positively related to the share price volatility (regression 
coefficient = 0.571 and statistically significant). This means that for companies listed on the HOSE, the more the company pays 
dividends, the more volatile its share price is. Thus, hypothesis H1 is accepted. The results of this study are consistent with the 
findings of the authors Baskin (1989), Hussainey et al. (2011); Nazir et al. (2010); Anh and Nhi (2015) but not in the same 
opinion as Hussainey et al. (2011); Hashemijoo et al. (2012). 
Secondly, the dividend payment ratio is negatively related to the share price volatility (regression coefficient = - 0.0307 and 
statistically significant). This shows that, for companies listed on the HOSE, when the company raises the interest payment ratio 
for its shareholders, the stock price movement will decrease, the stock price will be more stable. 
 76
Thus, the hypothesis H2 is not accepted. The results of this study are consistent with the results of the authors such as Allen and 
Rachim (1996); Hussainey et al. (2011); Hashemijoo et al. (2012) Lashgari and Ahmadi (2014); Noreen (2016) but does not 
agree with Baskin (1989). 
Thirdly, the size of the firm, or the capitalization of the firm found in this study, is negatively related to share price volatility. 
Thus, the research hypothesis H3 is accepted. The results of this study are in agreement with the results of many studies 
conducted such as those of Hashemijoo et al. (2012), Anh and Nhi (2015) but not in agreement with the studies of Al-Shawawreh 
(2014) and Lashgari and Ahmadi (2014). 
Fourth, profit volatility is also positively related to stock price movements. This means that for companies listed on the HOSE, 
when volatile profits will affect demand for shares in the market and make stock prices fluctuate accordingly. Thus, research 
hypothesis H4 is accepted. This research is consistent with the results of Leroy and Porter (1981); Shiller (1981); Allen and 
Rachim (1996) and Zainudin et al. (2018) 
Fifth, the debt ratio has a positive effect with stock price movements. The more companies borrowed, the more the share price 
fluctuated. Thus, research hypothesis H5 is accepted. This research result is consistent with the research results of the authors 
Black (1976); Christie (1982); Schwert (1989); Allen and Rachim (1996); Hussainey et al. (2011) 
Finally, the research results show that the growth rate of assets is positively related to stock price fluctuations. As the company's 
total assets increase, so does the volatility of the stock. Thus, the research hypothesis H6 is accepted. The results of this study 
are consistent with the findings of the authors like Zainudin et al. (2018) and Sadiq et al. (2013) 
6.2 Recommendations 
In recent years, income from dividends has begun to be interested by investors in Vietnam's stock market; However, most 
companies do not realize the importance of dividend policy and do not have clear and long-term orientations for profit 
distribution policy. The late payment of dividends, dividend debt takes place in many companies. Investors, especially individual 
investors, are always passive before stock price movements, making it difficult to set up investment plans to achieve the set 
goals. This article hopes to provide more useful information to help investors and businesses make appropriate decisions in their 
own conditions. Dividend policy affects changes in stock prices, thereby affecting the value of the business. The decision on 
dividend policy is a very important decision for businesses, even though the stock market is not as developed as in Vietnam. 
Obviously, it is difficult to provide a dividend policy that is considered a model for all businesses, because dividend policy is in 
a harmonious relationship between investment policy and sponsorship policy. However, each business depends on its business 
characteristics and current market conditions to have different investment and development policies. Therefore, the policy 
recommendations are made based on the research results of the model combined with the current status of dividend payment of 
businesses listed on the Vietnamese stock market. On the investor side, in order to achieve its investment goals, it is also 
advisable to take advantage of information about dividends of the enterprise used to analyse the company, choose to invest in 
enterprises with consistent, clear and stable dividend policy while choosing priority investment in businesses with high growth 
potential but low stock market prices. For the company managers: companies should try to maintain a safe dividend rate, small 
quarterly dividend policy combined with year-end dividend bonus should be considered and used for businesses listed on the 
stock market. From the research results show that, the more the company increases debt, the price fluctuation will increase. 
Therefore, the company needs to be cautious in deciding to raise capital by using debt instruments because it affects stock prices 
and thus affects equity and thus the capital raising goal may not be achieved. 
7. Conclusion 
This article has studied the factors affecting the stock price fluctuations of non-financial companies listed on HOSE. Empirical 
evidence has shown that DYield had a negative relationship with PVol but Dividend Pay-out ratio had the same effect with 
PVol. In addition, asset fluctuations, profit fluctuations, and the ratio of debt to total assets are positively related to stock price 
movements. However, firm size was inversely related to stock price movements. The relationship between dividend policy and 
share price volatility was quite significant to investors, policy makers, portfolio managers and researchers who were interested 
in capital market on decision making activities with the perspective of investment risk. Therefore, the managers should be 
knowledgeable enough to make decisions on valuation of shares, investment and dividend decisions in wide manner. To expand 
future studies, it should be focused on expanding the sample size by focusing on different sectors in HOSE to find out the 
different aspects of share price volatilities on various dividend policies. Furthermore, this research area can be integrated with 
emerging markets more over than Vietnam to identifying or establishing relationship between share price volatility and dividend 
policy in global perspective. 
T. Hieu Nguyen et al. /Accounting 6 (2020) 77
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