Relations Research Between Dividends Payment And Earnings Quality Of Listed Companies In China

Dividend policy is one of the cores of modern financing activities. From the birth of Shareholding Companies, dividends distribution had been a focus issue to both the company managers and the investors. This paper started with actual situation of dividends distribution in Chinese listed companies, and then researched the relations between dividends distribution and the earnings quality of these companies.The significance of this paper is to give a reasonable explanation based on following two different perspectives of the problems in real life. First, based on the perspective of corporate governance and decision-making, this paper try to develop what dividend policies is the most reasonable for listed companies, how to achieve the best balance between dividends and surpluses, how the surplus is most beneficial to the company growth and sustainable development. Second, based on the perspective of stock market investment, this paper try to explore whether the earnings quality affect the dividend payment ultimately or not, whether earnings quality can offer dividend return to investors, whether there is a necessary link between this return and the earnings quality or not, which can help investors interpret the factors of earnings quality hidden in the financial statements.The core content of this paper is broadly divided into the following two parts:on the one hand, the article tested the relations between different types of dividend policy and earnings quality in Chinese listed companies, reveal differences in earnings quality of listed companies in the form of pure cash dividends, pure stock dividends, mixed dividends and no dividends. The other hand, the article explores the relations between the listed company’s cash dividend payout ratio and earnings’quality. This paper classified the whole samples into high distribution and low distribution, and tested each of the relations between cash dividends payment rate and earnings quality.From theoretical discussion and empirical analysis, we can easily draw the following conclusions:First, the companies which distributed cash dividends had a good earnings quality. In Chinese listed companies, earnings quality levels are various under different forms of dividend payment. Listed companies of mixed dividends shows best, followed by payment of pure cash dividends, then the payment of pure stock dividends, the last is no dividends. Second, the earnings quality of listed companies which distribute cash dividends have positively correlated with the cash dividend payout ratio. We find that the companies which pay higher cash dividends show more remarkable between the two factors.