The Impact of Carbon Market Policy on Dividend Payout: Evidence from Corporate Carbon Trading

Taking advantage of Vietnam’s approval decision of supporting carbon market projects in 2015, this paper examines the impact of carbon market policy as an external shock, using data on Vietnamese listed companies from 2008 to 2023. Conducted within the context of 467 firms in Vietnam, the empirical analysis employs a difference-in-difference model to examine the effect of carbon market policy on dividend policy. Our findings show that the policy makes firms offer better dividends to shareholders and also highlights the moderating impact of earnings uncertainty and green innovation. These results offer invaluable suggestions for corporations to implement carbon trading activities according to the policy to build an economically appealing and environmentally responsible reputation toward external stakeholders, especially investors.