Research On The Impact Of Macro-Monetary Policy On Cash Dividend Policy Of Listed Companies

Dividend policy is one of the three core corporate finance activities, and cash dividend plays an important role among dividend distribution of listed companies, which have been the focus of the company directors, investors, regulators as well as the scholar’s attention. Global cash dividend practice has been more than300years, and national regulators have issued loads of policies and laws related to cash dividend. As to China, we have20years of cash dividend practice. Reformation of cash dividend released by regulators aimed to guide listed companies to provide returns to capital market investors. In recent years, the proportion of listed companies which implemented cash bonus has large scale enhancement. However, the level of dividend payments are far from the developed markets."why distribution of cash dividend exist "and"what factors affect the company’s cash dividend", such fundamental issues have still remained in dispute, pending further study and exploration on cash dividend theory.Since the famous Dividend Irrelevance Theory was raised by Miller and Modigliani in1961, the Dividend Policy and Dividend Policy Factor, as well as its economic consequences has been the hot issues of Corporate Finance. When conducted the research of dividend policy, few scholars combined monetary policies and dividend policy. China’s macroeconomic policies, especially the monetary policy proved to have impact on the company’s financial policy, because different monetary policy will change the external financing environment of enterprises as well as the enterprise’s financing behavior. The transmission mechanisms of monetary policy means that relatively loose monetary policy would help enterprises to get easier access to external finance, and relieve enterprises’ financing constraints. When the enterprises’financing constraints decrease, it will reduce the companies’reliance on its internal funds, and it may provide the opportunity for the investors to receive cash dividend from the above companies. Starting from2007, tightening monetary policy had strongly affected our economic and financing environment. And then the financial crisis had a strongly negative influence on China’s capital markets, then in late2008, the government implemented a relatively loose monetary policy to stabilize the markets. Monetary policy has far-reaching implications for enterprise investment and financing decisions, is it the same with allocation of profits? Based on previous researches, this article studies the relationship between the behavior of dividend policy of listed companies and the monetary policy in China.This paper examines the long-run relationship between the monetary policy and the dividend policy of2003SSE firms during2007-2012in China. And this research mainly aims to answer the following3questions:(1) Is there noticeable relationship between monetary policy and the cash dividend policy of the listed companies in China?(2) For different actual controller(State-owned or non-State-owned enterprises) of the listed companies, whether the macro currency policy has different influence on the cash dividend policy of the different companies;(3)Because listed companies are located in various province and regions which rank different level of Market, so whether the monetary policy has different influence on the cash dividend policy of the different companies.This paper begins with a literature which followed by analysis of relative theory about monetary policy, cash dividend policy as well as corporate financing constraints, and then proposes8hypotheses related to examines the long-run relationship between the monetary policy and the dividend policy. The next part of the paper is the empirical research. Finally, Summary all the results of the research and gives some relatively implications based on the empirical findings.Actually, monetary policy has significant positive impact on the willingness to pay cash dividends and the level of payments, and this impact maybe more prominent in the non-State-owned enterprises according to the empirical findings. And the process of marketization in China’s different provinces and regions may bring significant positive influence on the willingness to pay cash dividends and pay levels as well. Specifically, the greater the degree of commercialization, the more cash dividend the listed companies are inclined to release and the higher probability of distribute cash dividend. Further research find that the impact of macro-monetary policy on willingness to pay cash dividend and the pay level are more pronounced at the low degree of market-oriented region. This major innovations and contributions of this paper are in the following four aspects. Firstly, Combined the macroeconomic policy and enterprise of micro financial acts, and it will help us to understand how the monetary mechanism works. And the empirical findings provide some suggestions to the listed companies about how to behavior when faced with change of macro currency policy. Secondly, it is the first try to examine the long-run relationship between the monetary policy and the dividend policy of listed companies in China. And it would enrich the research literature of macro currency policy as well as the cash dividend policy. Thirdly, according to description information of the monetary policy form the bankers questionnaire investigation report and the currency policy feel index to measure macro currency policy, this method is also an "innovation which maybe contribute to the future research on monetary policy. Fourthly, the empirical findings have important theoretical value for the research on monetary mechanism, corporate finance environment as well as financial decision.