Research On The Pecking Order Distributing Policy Based On The Life-cycle

Dividend policy is regarded as one of the company's financialproblems which is a consideration between profit invert and repay tothe stockholder. It not only affects the stockholders' interest andthe future of the company, but also affects the balance betweendifferent stockholders' interest. The paper is based on the theoriesof the remainder dividend theory,the agency cost hypothesis and thesignaling hypothesis. Also it raises the partition between capital andprofit principle. Also, the paper analyses the affecting factors. Thenthe paper studies the analysis of the dividend policy in the financialstrategy, and includes Bender and Cranfield who wrote the book offinancial strategy discussed the different dividend policies under theproducts' different life-cycle and lever collocation. On the basis ofthe research achievement, the author establishes the Pecking OrderDistribution Policy. When the company's investment reward is more thanthe stockholders' reward, the pecking order distributing policy isstarting from no dividend to the remainder dividend to low normal plussuperfluity dividend policy. On the other hand, When the company'sinvestment reward is little than the stockholders' reward, the peckingorder distributing policy is starting from all dividend to fixation dividend to stabilization dividend to low normal dividend to theremainder dividend policy. The policy contains connatural limitation,however, the author goes step further to put forward the pecking policyof distributing dividend on the Life-cycle in the company in view ofa series of supposing condition. When the company is on initial stage,it needs more cash, but the profit is little and instable, the cashflowing is instable. At the same time, the operating risk is very highand the financial risk is very low. The company's pecking orderdistribution policy is starting from no dividend to the remainderdividend to low normal plus superfluity dividend to issuing new stocksunder this situation. When the company is on developing stage, it needsmore cash, but the profit is increasing, the cash flowing is instable.At the same time, the operating risk is very high and the financial riskis lower. So the company's pecking order distribution policy isstarting from low dividend to the remainder dividend to no dividendpolicy. When the company is on developed stage, it needs stable cash,and the profit is also stable, the cash flowing is more. At the sametime, the operating risk and the financial risk is lower. So thecompany's pecking order distribution policy is starting fromstabilization dividend to fixation dividend to higher dividend policy.When the company is on wane stage, it needs low cash, and the profitis declining, the cash flowing is out. At the same time, operating riskis low and the financial risk is high. So the company's pecking orderdistribution policy is starting from all dividends to fixation dividendto the remainder dividend to returning dividend policy. Then, it bringsabout the Chinese listed companies' dividend policy is not rationalon the basis of the situation about the tow stages of the policy ofDistributing Dividend in China. At last, it studies the direction ofthe pecking order distribution theory and the Chinese listed companies' improve measure in order to establish the moderate policy.In a word, the pecking order distribution theory, choose the fit andcontinuous dividend policy in order to improve the stockholders'wealth and enhance the value of the company.