The Empirical Study On The Relationship Between Dividend Policy And Earnings Persistence

"Dividend puzzle" has been a hot academic topic for a long time. As China's capital markets improving, the stock has been getting closer and closer into the lives of ordinary people, dividend policy accordingly become a major focus of concern. With the participation of everyone on the stock market, people accept the long-term investment than the short-term speculation. Investors are more and more concerned about the sustainable development of the companies, Whether there is a long-term investment value. Shareholders want to understand the prospects for the future development of the company through the dividend policy and the company also hopes to convey information through it they hope to find a good dividend policy to attract more investors.Based on Chinese stock market from 2002 to 2007,we test the type of dividend policy and dividend payout rate and the surplus of the relationship between continuous empirical research to draw the following conclusions:1. Chinese listed companies that distribute dividends have more persistent surplus than the company that do not distribute dividends. Among them, the companies that distribute the net cash dividends show the significant sustainability in the overall surplus and its various components .but the companies that distribute the pure stock dividends do not show the significant surplus of continuity . The companies that distribute mixed Company dividends are between them.But from the perspective of changes in earnings, both types do not show remarkable continuity.2. Studing the relationship between the rate of cash dividends and the sustainable earnings, We find that the companies that pay too much or too little cash dividends do not have a significant show of continuity in the whole surplus and its components.But companies that send medium cash dividends have shown the remarkable continuity in the whole surplus and its components,and from the perspective of changes in earnings, only this companies show the significant surplus of continuity .For the above conclusions, The author believes that the companies sending medium cash dividends is a better choice for the investors, and the companies should find what is the appropriate ratio for the development of the companies. The innovation of this paper :1. In the modeling process, in view of the specificity of China's capital market,author has amended on model, separate a pure stock dividend return and eliminate the multicollinearity of the model to make it more rationalization.2. On the level of dividend payout ratio has been divided into three categories of high, medium and low, testing at different levels of continuity with the relationship between earnings, more focused.