This paper aims to show the relationship between investment and dividend in cash flow uncertainty condition by using data of 246 Vietnamese listed firms from 2011 to 2014. The study shows that in the relationship between investment and dividend does not significant in both two alternative measurement methods of cash flow uncertainty. However, in the case cash flow uncertainty is measured by cash flow shortfall, the relationship between investment and dividend in each level of shortage is significant at 10%. Besides, the study shows that Vietnamese firms tend to reduce liquid assets to deal with cash flow shortage and Vietnamese firms tend to invest in other firms despite of they are facing with cash flow shortfall.
University of Economics Ho Chi Minh City; VNP (Vietnam – The Netherlands Programme for M.A. in Development Economics)