An Empirical Study On The Influencing Factors Of The Cash Dividend Policy Of Chinese Listed Companies

Since John Lintner established the theoretical model of the company’s cash dividend payment behavior in1956, different scholars followed have been doing researches from different perspectives on the dividend policy, trying to solve the "dividend puzzle".However, the researches on dividend policy is still inconclusive, even more complicated and confusing. The company’s cash dividend policy will not only be subject to the situation of the company itself, but also be effected by various factors from the macroeconomics and industry attribute. So, to find out the factors which influence the company’s cash dividend policy is not a easy job,especially for the Chinese listed companies.In order to understand the determinants of the cash dividend policy of the listed companies in China, the first part of this paper summaries the theoretical knowledge of the dividend policy, mainly consisting of three parts:What is dividend?What is dividend policy? Then we review the classic dividend theoretical,such as the MM theory,"a bird in the hand" theory,signaling theory and agency cost theory. In the second part, we have a cash dividend policy reviews of the literatures of dividend policy at home and abroad from seven perspectives,which are also the main determinants of the cash dividend policy:the size of the company, profitability, debt level,the company’s cash flow, investment opportunities and the industry attributes.In the third part,we will have a overview of the status quo of the distribution of cash dividends of listed companies in China from1990to2011.It mainly includes the evolution of the distribution system of cash dividends of listed companies in China, the features of the listed company’s cash dividend policy,which consists of the willingness of dividend distribution, continuity and stability of the dividend payment and the rate of dividend payment, and Chinese "semi-mandatory bonus system".The fourth part of this paper is established for the authentic proof research on the cash dividend distribution of listed companies in China from1990to2011. Here all the A-share listed companies in2011are selected for the study sample,which are divided into three groups:companies listed on the Main Board, small and medium enterprise board and GEM (short for Growth Enterprises Market). Then I set two models for the main determinants of the cash dividend policy:Logistic model for the empirical study of the willingness of dividend distribution,and the multiple linear stepwise regression model for the rate of dividend payment of companies listed on the Main Board, small and medium enterprise board and GEM, respectively.The results achieved by the empirical analysis are rich. First, the conclusions of influencing factors of cash dividend distribution willingness of listed companies are as follows. The determinants of willingness of dividend distribution of companies listed on the Main Board are firm size (+), the level of indebtedness (-) and profitability (+).The determinants of willingness of dividend distribution of companies listed on the small and medium enterprise board are debt level (-), profitability (+) and growth opportunities (-).The determinants of willingness of dividend distribution of companies listed on the GEM are earnings per share (+) and Cash Dividends capacity (+). Second, the conclusions of influencing factors of cash dividend distribution willingness of listed companies are as follows. The determinants of the rate of dividend payment of companies listed on the Main Board are debt levels (-), profitability (-), and the controlling shareholder(+).The determinants of the rate of dividend payment of companies listed on the small and medium enterprise board are cash (+) and profitability (-).The determinants of the rate of dividend payment of companies listed on the GEM are size (+), earnings per share (-), debt levels (-) and growth opportunities (-).According to the conclusions of this study,there seems to be an inverse relationship between the rate of dividend payment of companies and ROE,cash dividends policy of companies listed on the Main Board is still influenced by the controlling shareholders, and the checks and balances of the other shareholders of all the listed companies is useless.So I propose some recommendations,such as canceling the provisions of cash dividend payment linked to refinancing,prohibiting the behaviors of exceeding its disposable cash to pay the cash dividend, formulating the mandatory dividend policy,advocating the culture of value investing and long-term investment, further perfecting corporate governance, guiding listed companies to develop a continuous, stable cash dividend payment level to enhance the confidence of investors and thus stabilize the company’s stock price so that all shareholders could benefit from the long-term stable development of the companies, perfecting corresponding investor protection legal system, developing agency system of voting to gather the small shareholders together to balance the controling shareholders, introducing policies to support the development of institutional investors to play its role in cultivating the idea of value investing and long-term investment, and helping the medium and small investors to develop the idea of value of investment and long-term investment to restrain the speculation in the stock market.