The Research On Dividend Policy And Improvement Of China Merchants Property Development Co.Ltd

Since the dividend policy can reflect a company’s business activitiesand performance, it has a significant impact on company’s stock valueand market image. Therefore, the dividend policy is not only a simplequestion of profits distribution, but also a refinancing problem. It is aresult after considering the macro business environment, operatingconditions and the cost of capital, which will affect the company’s futureinvestment decisions, therefore maximizes its goal of value.Just because of the extreme importance the dividend policy has toone company, as well as comprehensive consideration which should betaken in the process, many accounting scholars and economists at homeand abroad have already carried out in-depth study on it and formedtheories such as the signal transmission, agency cost, transaction cost, taxeffect and so on. However they have not yet reached a consensus.As a real estate company listed earlier, China Merchants SteamNavigation Co. Ltd. has been affected on many aspects and levels, whichare ultimately concentrated upon the dividend policy making. Accordingto the information of macroeconomic situation, business performance anddividend disbursement collected over the years since the company’slisting, we found that its dividend policy has following characters: it wasclosely associated with macroeconomic situation and wasforward-looking; it was closely related to business performance; if thecompany distributed a very low cash dividend, the amount is most likelyto bounce back the next year; the dividend policy did not have continuity.Based on the consideration of the macroeconomic situation, thecondition of the real estate industry and business performance, weanalyzed whether its dividend policy was reasonable under theories ofsignal transmission, agency cost and life cycle. During its application of dividend policy, we found that the corporate sometimes distributes morecash dividend at growth period, but less at maturity period, which quitediffers from the life cycle theory and in turn leads to higher agency cost.This paper puts forward a series of improvement measures for theseproblems in order to provide reference for China Merchants Property andother enterprises.