The Research On Dividend Policy Of ChiNext Market

The ChiNext (Chinese growth enterprise market) with its third anniversary, since itestablished in2009, reveals two main characteristics:1. Indicators are very high innumbers of IPOs, raised funds, the amount of Super-raised funds and wealth creationeffects;2. However, these indicators were not equivalent to investor returns. Three yearssince the launch of the ChiNext, ChiNext listed company dividends are declining eachyear, which a great contrast to the high raised funds of it. Chinese capital market, inparticular, the ChiNext market highlights financing-oriented, do not attch importance toinvestor protection. There no strict laws and regulations to promote the listed companiesto protect interests of investors after the review listed, resulting in a dividend yield of theChiNext market generally is low. For the purpose of protection of the interests ofinvestors and investor confidence establishment, it is necessary to analyse the dividendstructure of the ChiNext listed companies combined with investors required rate of return,and the financial position of the ChiNext listed companies. Try to find out whether theChiNext lishted companies own the ability to enhance reasonable and sustainable cashdividend payout by given points of view&suggestions in this article.Working on the improvement of the level of cash dividend payouts, departing fromsustainable dividend payout ratio, this article has found that dividend payout ratio(POR)really far below the sustainable dividend payout ratio(SPOR). This outcome alsoillustrates that the need for reforms of the ChiNext dividend policy exist under the reformof capital market to look high upon interests of investors. Therefore, in order to come to areasonable dividend payout rate that explains sustainable cash dividend ratio isreasonable in line with the company’s future development and is also in line with theprotection of interests of investors, this article relies on dividend theory, cost of capitaltheory, the theory of sustainable development to build ChiNext estimation model of cashdividend paytout ratio (SPORM). From ChiNext, this article used3years of relevantfinancial data, the beta coefficient, the risk premium parameter model statistics, inaccordance with the model assumptions: When the cost of capital (investors required rateof return) is greater than the return on net assets (ROE) which means the company’s return on investment can not meet the level of the required rate of return to investors, theChiNext listed companies should strengthen cash dividend to compensate investors;conversely, ChiNext listed companies can drop the dividend payout ratio(POR) to alower sustainable dividend payout ratio (SPOR). Finally, this article found that theproportion of cash dividends payout(POR) is even lower than the SPOR, which can notthoroughly meet the above assumptions, but part of the assumptions: In considering1.Only cash dividends samples and2. All the companies included non-cash dividendpayout samples, and also considering after the changes of the provision recovery ofreturn on equity (ROE), in both cases the actual dividend payout ratio is less thansustainable dividend payout ratio, in which only the2011sample group explain why thedividend should be increased if ROE less than the cost of capital.Last but not least, this article starts on the specifications of ChiNext listedcompanies cash dividend policy, and then issues complementary approaches about theoptimization of the internal and external environment as well as some proposedrecommendations for cash dividends policy.