THE TEST OF FREE CASH FLOW THEORY: EVIDENCE FROM DIVIDEND POLICY IN VIETNAM

This study tests the theory of free cash flow based on sample of 100 companies listed on HOSE Vietnam in the period 2008 -2012. The result show that the dividend of companies listed on the HOSE is consistent with the theory of free cash flow. This means that the company with pays dividends or higher dividend than average 47.36% has the largest free cash flow. This study also finds that the company paying dividends or higher dividends is at the small size. Explaining for this, the groups of authors suggest that small companies pay dividends or higher dividends because they want to keep the stock price in the context of stock market declining. This makes the authors questions whether the company pay dividends to meet the need of investor. Therefore, the authors suggest further research which is used to test the theory to meet the needs of dividend on the stock market in Vietnam.