Analyzing The Dividend Policy In China

Before 2000,there are only a few of corporations that paid dividends, and the governance related the dividend policy with new financing to protect the tradable shareholders in 2001. Then most of corporations began to pay dividends. This paper analysts the cause of this transit from the investor preference and the factors affecting manager's decision and got three points as followed:1. The tradable shareholders don't prefer to the corporations that pay dividends, so the transit can't be explained by the preference of tradable shareholders. And then this paper analysts the cause of the preference. Based on the information economics, the shareholders don't like dividends because they believe the corporations that pay dividend maybe have good project, but data show that there are no difference in those corporations who pay dividends and those not.2.Compared the quantities of corporations that pay dividends and those corporations that finance from the market, we find paying- dividends and new-financing aren't in point So we can say the corporations pay dividends not only for new financing.3.Then we analyst whether nontradable shareholders influence the dividend policy deeply, and find those corporations which are controlled by governance are inclined to pay dividends. So we can see nontradable shareholders prefer to dividends.Compared with the feedback of tradable shareholders, maybe dividends become an approach of nontradable shareholders to rob the benefit of tradable shareholders. This result was the other way round with the aim of governance.Some papers in China only pay attention to the investor's reaction to dividend policy or analyst, and other papers only simply analyst those factors, which affect the dividend policy. I integrate those into this paper to analyst the dividend policy taking all stakeholders in consideration.And those papers use CAR to analyst the investor 's reaction to dividends, while this paper use dividend premium to analyst it.