An Explanation Of Dividend Policy In Listed Firms By Behavioral Finance

The paper conducts research into the dividend policy of the listed firms, which attracts the popular attention from the theorists and practitioners. The purpose of this paper is to combine the traditional theories and behavioral finance, develop a theoretical model to probe into factors which may determine dividend policy, test the applicability and empirical validity of dividend theories in China, and deepen the research of dividend payout policy of the listed firms in China.The paper firstly gives a brief historical review of the most important theories of dividend policy, then discusses the theories relevant to dividend policy in behavioral finance, and describes the current situation and background of dividend payout policy of the listed firms in the domestic stock market. Based on the previous work, a theoretical system with simultaneous equations is constructed to reflect the whole corporate finance activities including financing policy, investment policy and dividend payout policy. And a further empirical analysis is followed using this theoretical model.The results of the empirical reseach show that the percentage of shares owned by the primary stockholder, the concentration of shares, financial risk, operational risk and dividend payout ratio in the previous year have positve effects on dividend payout ratio, while asset-liability ratio and the growth of income have a negative correlation with dividend payout ratio. Besides, the relationship between the ownership structure and dividend payout ratio depends on whether the primary stockholder could control the listed firm or not. And finally the evidences show that the managers of the listed firm did not cater to the circulation stock holders by paying cash dividend.The end of the paper modified and improved the proto-model. On the basis of the empirical study, the last part puts forward some suggestion and advice.