Research On The Dividend Signaling Effect Of Chinese Listed Companies

Dividend policy is one of the three financial management decisions of listed companies.It is cared for by investors and market as an assignment of business income,and is very important to the financial operation of the companies.The signal transmit theory of dividend policy believes dividend distribution can be a kind of effective tool that transmits internal information of listed companies because of asymmetric information and imperfect market.The public company conveys information about its condition and prospect to the market by selecting the best dividend payment in order to balance the information of managers and investors.So investors can estimate a corporation's quality.For the immaturity of securities market and imperfection of the running machinery in China,dividend policy to Chinese listed companies hasn't been paid attention to.Therefore it's some meaning to research the dividend signal theory's applying to China Securities Market.Based on signaling transmission effect, this paper studies empirically on the cash dividends of the listed companies in China with respect to cash dividend. After reviewing the signaling transmission effect, this paper analyzes the traits and reasons of the formation of cash dividend policy through both theoretical and empirical methods. The research shows that the signaling transmission effect does exist.Finally, according to the empirical conclusions, several suggestions have been proposed about how to further standardize dividend policy, and enhance the signaling effect of dividend policy, which may help investors distinguish promising and poor companies using the cash dividend's signaling transmission effect.