Research On The Relationship Between Free Cash Flow And Dividend Policy Choice From The Perspective Of Life Cycle

Based on the research at home and abroad,this paper combines the free cash flow hypothesis,the dividend policy theory and the enterprise life cycle theory.According to Haier's annual report from 1993 to 2018,Haier's 25-year relationship between free cash flow and dividend policy was analyzed.The first part is a brief introduction to Haier Company.The second part is to divide the enterprise into three stages:initial stage,growth stage and maturity stage according to the cash flow positive and negative method and the actual development of the enterprise.The third part is to calculate three enterprises separately.The free cash flow and dividend payout rate respectively analyze the relationship between the three stages of free cash flow and the dividend policy.The fourth part is to evaluate the Haier Group's dividend policy and give suggestions for improvement.The research results show that Haier Group's dividend growth policy is positively related to the change in free cash flow,and the overall trend is consistent.However,considering Haier's influence as a world-renowned company,it cannot distribute dividends for two consecutive years.Will send a bad signal to the outside world,so the company still distributes dividends when the free cash flow is negative;in the mature period,it chooses a low dividend plus additional dividend policy.The dividend policy is positively related to the change in free cash flow.The correlation is more significant than the growth period.Among them,the 2003 SARS epidemic caused negative free cash flow.In order to boost investor confidence,Haier Group chose to distribute dividends;During the growth period,Haier Group's free cash flow fluctuated sharply,but because of its earlier fund accumulation,Haier Group chose a fixed dividend payment rate policy,and the dividend payment rate remained at about 30%,Maintained relationships with shareholders.