Forecasting Earning And Growth Of Company Based On Its Dividend Policy

In the stock market, the source of profit the investors gain come from two channels, one capital gains, the other the dividend, the fluctuation of the stock price reflects the expectation that investors have on the company' potential of profitability and growth. If the investors have access to the information of the company's potential of profitability and growth, they will profit from the buying-and-selling of the company's stock. The ways that with them investors get the information of the company's potential of profitability and growth are not only the fluctuation of the stock price, but the financial statements and the policy of dividend, so it is greatly significant to study policy of dividend. Be based on the purpose, my paper firstly tries to define dividend and policy of dividend, then collects masses of relevant researching fruits both oversea and domestic and make wise evaluation on them, during the evaluating my paper specially emphasized on the theories of both contacting hypotheses and signaling hypotheses, at the end the model of the relationship among the policy of dividend, the potential of company' profitability and the potential of company's growth. While researching the developing history of Chinese listed company' dividend policies and the characteristic of them, empirical test are made on the extent of information including in the policy of dividend, the stability of dividend policy is also caught my attention. Based on the researching of the stability of dividend policy, weather the information of earning and the potential of company's growth is included in the dividend policy is concluded, the answer is Yes, then weather the information of dividend radiating out accords to contracting hypotheses or does to signaling hypotheses are also concluded. In my paper the innovation is that I make a step further on the study of relationship between cash dividend, total dividend, stock dividend and the future earnings, growth and also give the conclusion of relationship between cash dividend, stock dividend, total dividend and future earnings, growth. In the last part of my paper, based on the former researches the suggestions are made to investors, board members of listed companies, supervising organization as to how to wisely using of dividend policy and how to delivering the information of the operating situation of company to the public, also the weakness and the restriction of the paper are pointed out, further researching direction are pointed out.