Impact of state and foreign ownership and free cash flow on dividend policy within a governance context

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Abstract

This study investigates the impact of state ownership (SO), foreign ownership (FO), and free cash flow (FCF) on dividend policies of Vietnamese-listed companies from 2014 to 2023. Furthermore, control variables are also included in the model, including firm age (AGE), firm size (SIZE), current ratio (CUR), quick ratio (QR), return on assets (ROA), asset turnover ratio (ATR), and COVID-19 (COVID19). To examine this impact, we conducted various statistical methods, including pooled ordinary least squares (OLS), fixed-effects model (FEM), random-effects model (REM), and feasible generalized least squares (FGLS) estimation analysis on 4,840 observations from 484 companies. We find that SO and FO positively influence both cash dividend yield (CDY) and dividend payout ratio (DPR) (Setiawan et al., 2016; Boshnak, 2021; Tnushi et al., 2023), while FCF shows no significant impact (Azfa & Mirza, 2010; Mughal & Muddasir, 2023). The study also reveals that the COVID-19 pandemic significantly affected dividend policies. These findings contribute to the understanding of dividend determinants in emerging markets and provide insights for policymakers and investors in the context of evolving ownership structures and external shocks.

Keywords: Cash Dividend Yield, Dividend Payout Ratio, Free Cash Flow, State Ownership, Foreign Ownership

Authors’ individual contribution: Conceptualization — T.T.N.; Methodology — T.T.N.; Software — T.N.L.; Validation — T.T.N.; Formal Analysis — T.H.N.L.; Investigation — T.T.N.; Resources — T.H.N.L.; Data Curation — T.H.N.L.; Writing — Original Draft — T.T.N.; Writing — Review & Editing — T.T.N.; Visualization — T.T.N.; Supervision — T.N.L.; Project Administration — T.H.N.L.; Funding Acquisition — T.T.N.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: G11, G32, G34, 016

Received: 03.10.2024
Revised: 07.02.2025; 18.07.2025
Accepted: 11.08.2025
Published online: 14.08.2025

How to cite this paper: Nguyen, T. T., Luong, T. H. N., & Le, T. N. (2025). Impact of state and foreign ownership and free cash flow on dividend policy within a governance context. Journal of Governance & Regulation, 14(3), 138–147. https://doi.org/10.22495/jgrv14i3art13