Cash Dividend Or Stock Repurchase?

Generally speaking,investor income includes dividend income of stock dividend and capital gain income of stock transfer.Through cash dividend,investors can get direct income;and through stock repurchase,the company's out-of-circulation equity is reduced(the market supply is reduced),the earnings per share is increased,stock price usually rises,and investors can obtain indirect income.Because companies need to pay cash for stock repurchase,which can also achieve the ultimate effect of protecting investors' rights and interests,so some scholars have also included stock repurchase in the research category of "dividend payment method",and compared it with cash dividend.Based on the statement in The Opinions on Supporting Stock Repurchase of Listed Companies,which published in 2018 by the Securities Regulatory Commission,the Ministry of Finance and the SASAC,that "Where a listed company repurchases shares in the current year on the basis of cash by way of offer or centralized bidding,it shall be regarded as cash dividend,and be included in the calculation of the relevant proportion of cash dividend in that year",it is also implicit that on the practical level,stock repurchase can substitute for cash dividend.But the premise of cash dividend or stock repurchase is good financial flexibility.On the one hand,keeping financial flexibility can reduce transaction costs;on the other hand,cash dividend or stock repurchase can transmit positive signals to the market,thereby reducing agency costs.In fact,the choice of financial flexibility policy and cash dividend or stock repurchase is the result of trade-off between transaction cost and agency cost.Its main purpose is to achieve the ultimate effect of the lowest total cost and the greatest enterprise value.In practice,based on limited financial flexibility,listed companies will also fall into the confusion of choosing cash dividend or stock repurchase.Especially under the background of the system of "semi-mandatory dividend sharing" and the incentive policy of stock repurchase in China,what is the implementation intention of enterprises with different levels of financial flexibility for stock repurchase and cash dividend sharing? And whether there are differences in the real motivation of different listed companies to make trade-off decisions? Above is the key issue to be explained in this paper.Through the statistical analysis and empirical research of this paper,the main conclusions are as follows: overall,there is a significant positive correlation between financial flexibility and cash dividend,stock repurchase intention.However,due to the differences in reality and motivation among enterprises in different listed sectors,there are great differences in their correlation.Specifically,for the main board enterprises,there is a significant positive correlation between financial flexibility and cash dividend,stock repurchase intention;for the small and medium-sized board enterprises,there is a significant positive correlation between financial flexibility and cash dividend intention,but there is no significant correlation between financial flexibility and stock repurchase intention;for the GEM enterprises,the level of financial flexibility and cash dividend,stock repurchase intention are significant positive correlation.There was no significant correlation between willingness.