Determinants Of China-listed Corporation Dividend Policy

The formation of a theory is based on its local market environment. The western dividend policy theory is formed from its special historical background, which also determines the financial behavior of the western listed corporations. As lack of controlling shareholders and managements constraints, the agency cost theory does not apply in China. The differences in tax system between China and United States cause the tax effect theory and customer effect theory lack of practical value in China."A Bird in the Hand"theory has also been criticized by China scholars. When western dividend policy theories are invalid in China, we try to learn their ideas and methods, and analyze China's securities marker environment to explore China's dividend policy theory.The paper includes four chapters: the research synthesis on dividend policy at home and abroad; the summary of China securities market environment; the empirical research on China dividend policy; the summary of China dividend policy; strategic suggestions.After analyzing the literatures, we conclude that 1) the formation of western dividend policy is based on the research and application of the existing regulations or law, such as tax effect theory and the customer effect theory, or 2) it is the game results of interest parties, such as the agency cost theory. Nevertheless, the previous theoretical and empirical studies have only referred to the conclusion of western theory, rather than analysis of its methods or assumptions. Therefore, this paper is mainly focused on the analysis of China securities market environment. In the empirical research, we find out that our dividend policy is lack of financial, scale and proportion of shares effects. The policy is the game results of controlling shareholders, funds and small investors. Among them, the controlling shareholders have the most influence through the means of financing in the securities market to pay dividend. Out of liquidity demand, the funds also require listed corporations to pay dividend. However, in absolute controlling structure and controlling balance structure, we find that the influence of funds on the dividend policy is weaker than the controlling shareholder. Furthermore, the small investors'influence is the smallest.