Dividend Policy Research

As one of the three corporate financial policies,Dividends policy has always been a complex problem of corporate finance:what a rate of profit should be paid to shareholder? How and when to pay are better? such problems haven't been solved up to now. But the phenomenon that more and more foreign economists are interested in the research of dividend in recent years imply the great importance of dividend policy in corporate development. Since the foundation of joint-stock corporations just emerged in China a short time ago,we have very limited knowledge on dividends policy at present and our research on it is scare. This dissertation tries to make some theoretical discussion and empirical studies on it to meet the needs of the reform of joint -stock system and of listed corporations.Chapter one,as an introduction of this dissertation,revealed the background,the objects,train of thoughts and main conclusions of my study. It also explain some important concepts.Chapter two analysed different types of dividends policy,discussed their characters and effects on stock market,and emphasized that corporations in China prefer stock dividends because this type of payment can raise the value of shareholder's wealth ramarkably.Chapter three discussed the relationship between dividends policy and corporation's value. Miller and Modigliani's dividends theory Showed that in a world without taxes or transactions costs and where everyone was fully informed about the distribution of the firm's uncertain future cash flows,dividend payout does not affect the value of the firm. Once corporate and personal income taxes were introduced,then the theory suggested that perhaps it would be optimal to pay no dividends at all. In recent years,foreign economists focused on the two dividend puzzles,puzzle one:if dividend are taxed higher than capital gains,why do corporations pay such high cash dividends. Puzzle two:why corporations which need to raise fundswould pay out dividends. In this chapter,we gave three possible explanations:(1) the clientele effect is really exact. (2) information-signaling role of dividends. (3) role in controlling agency costs.Chapter four touched on affacted mechaninsm of dividends policy on corportions financing decisions,firstly,we conclued that the preferences of corporations financing would follow the order as:internal financing --debt financing - equity financing. Secondly,probed into the characters of corporations in China,we pointed out that the preferences of corporations in China would follow a different order as:internal financing - equity financing-debt financing,and finally we analysed how dividends policy coordinate its activities with the corporation' financing decision in China.Chapter Five discussed the relationship between dividends policy and the structure of corporate control and analysed how stock repurchase realize its defensive function against external takeover.Chapter six studied the proper dividends policy for Chinese corporations.In a word,this dissertation has three main conclusions,dividends policy are related to corportion's market value,and its mechanisms are from financing decision or control structure of corporations,finally established proper dividends policy for different Chinese corporations.