The Study Of Relationship Between Institutional Holdings And Payout Policy Of Listed Companies

Institutional investment level is the most important resource of institution management company establishing their core competition, and this is the difference between development country and China. As one of selection of Institution , stock selection is supposed to be paid more attention. Now Institutional investment style rarely belongs to some fixed one, while it changes according to the stock situation. As we know, there are many influencing factors of Institution investment, such as cash flow. And there are some studies about these factors, while the problem of selecting stocks of Institutional investment is the weak place of studies. As a kind of financial policy, dividend policy of listed companies is determined by company according to their own factual situation and stock situation. And dividend policy can reflect profits of company. It is important to make clear of the relationship between dividend policy and institutional holdings, in order to supply good suggestions of stock selection for institutions.Based on the Asymmetry Information Theory, Signal Transfer Theory of Dividend,"Prudent man" Rule , changes of institutional investment styles and dividend policy of listed company and previous studies , four relative hypotheses are put forward. Using data of listed companies of China from 2000 to 2004, making most of all kinds of methods, for example, descriptive statistics, relative analysis, linear regression and so on, the study of relationship between dividend policy and institutional holdings is done.Compare institutional holdings of paying-dividends companies with that of unpaying-dividends companies, Results of the empirical study suggest that institutional holdings are evidently different from 2002 to 2004. Furthermore, the different level of dividends paid results in different institutional holdings. While the institutional holdings are not different in different dividend ratio level. That is to say, institution prefer the dividend-paying listed companies. At the same time, among the dividend-paying listed companies, institution doesn't like the high dividend payout rate companies, but prefer high dividend-paying listed companies, and high dividend yield rate companies have great influence on institutional stock selection. In a word, when stock selecting institution managers take greatly dividend policy of listed companies into account.