Determinants Of Corporate Dividend Policy

Dividend policy of the company is a strategic guidance which aims to maximize firm value of and the development of the basic objectives for each of the activities and to guide the company's dividend distribution methods or measures,including the payment of dividends and the dividend distribution level.Dividend policy,financing decisions and investment decisions are referred to as three major financial decisions of listed companies.Although it has attracted widespread attention and discussion of academics and practitioners,but exact factors on dividend policy,the impact on the value of the company is still a "mystery"of financial circles(Black,1976).From a global perspective,dividend dividend has 300 years of history.Dividend policy of listed companies of China has nearly 20 years of history.After several reforms,it has grown mature from the initial openness to manipulation.However,compared with developed capital market,there is still some problems with corporate dividend policy of listed companies of China,naming as "Chinese-style dividend puzzle"In the year 2008,equity division reform of listed company basically completed and China stock market into circulation times since then.The global economy experienced a financial crisis,recovery and development.This provide a special setting for research of corporate finance.For a long time,the academic focus on dividend policy has always been based on microscopic features perspective,placing less concern on macroeconomic factors and behavioral factors.,Impact of Chinese listed companies' dividend policy has always been controversial.Based on this reality and theoretical background this paper make a comprehensive analysis on factors affecting the dividend policy of China's listed company.Based on the findings of the current research,we choose firm characteristics,corporate governance,macroeconomic factors and managerial behavior as perspective,building analysis framework based on agency theory,theory of the legal protection of investors and managers' behavior theory.It empirically tests the impact of corporate identity,corporate governance arrangements,legal environment and managerial overconfidence on dividend policy.The main findings include:(1)Company size,profitability has a positive impact on the company's dividend policy.Mature companies pay more dividend than new companies.There is no substitute effect between stock dividend and cash dividend.(2)Ownership structure is a key factor affecting the company 's dividend policy,the ratio of the largest shareholder and dividend payout level shows an N-type relations,that is with a dispersed ownership of other large shareholders may be the largest shareholder of checks and balances,but in highly concentrated ownership,the other major shareholders with the largest shareholders may deal a conspiracy,encroaching on the interests of minority shareholders.Currently institutional investors in listed companies have not yet fully play governance role.Serving two roles of chairman and general manager fuels the motivation to share major shareholders of listed companies using cash dividend income.Financing constraints and external auditing play a direct impact on the company's financial policy.The liability has a rigid constraints on dividend distribution to shareholders.It makes a major shareholder by inhibiting a certain extent.External auditing plays a function to protect the interests of small investors outside.(3)Alternative models of legal protection in China's capital market has more explanatory power.In market with poor legal protection of minority shareholders companies tend to pay higher dividends in order to build credibility mechanism.With improvement in the legal environment,there is less need to establish credibility.Company will reduce the dividend payment which was put into better investment project.Compared to the cross-listed company,companies with only A-share in mainland market tend to pay more dividends.(4)Managerial overconfidence will generally reduce dividend payment.The existing literatures displayed the expected return on investment managers and performance excessive optimism tend to get more financing to support more investment.But the results of this test found no relations between managerial overconfidence and debt financing.In this case,overconfident managers will reduce the level of dividends payment to retain more retained earnings for investment projects.However,in high-growth companies,the impact of managerial overconfidence on dividends generated will be weakened.Dividends paid by listed companies in China will affect the overall enterprise value and improve the level of dividend payment will reduce the corporate value of the Company's managerial overconfidence,dividend payments will not reduce the enterprise value,because they can reduce agency costs caused by free cash flow.Setting in the economic transformation of China's emerging capital markets,institutional changes and equity division reform,this paper combine macroeconomic environment and policy background and business microscopic behavior to test determinants on the company's dividend policy and internal governance mechanisms of the external governance mechanisms a more comprehensive study on the characteristics of the dividend policy of the international comparison.The system provides environmental differences(region)between the different countries of the operating efficiency of the system,providing equity division reform,excluding the circulation restrictions,dividend policy and its determinants.It also provides new evidence of dividend's impact on corporate value.Research combined with our unique institutional background factors and investigates equity structure,nature of controlling shareholder,characteristics and other state-owned enterprise managers of listed companies on dividend policy and its mechanism.To some extent,this paper expand agency theory.Combination of macroeconomic environment and policy background and business microscopic behavior will provides a guideline and reference for future research in this area.