Empirical Study Of Dividend Policy Of Chinese Listed Companies

Based on signal theory, this paper conducts an empirical study of dividend policy of Chinese listed companies in Shanghai and Shenzhen A-share market, using Lintner dividend improvement model to analyse a regression of listed companies in Shanghai and Shenzhen. The results show that the dividend signaling effect exists in China's Shanghai and Shenzhen A-share market. And further using factor analysis-regression analysis, to research the information content of dividend policy of chinese listed companies, obtained: chinese Shanghai and Shenzhen A-share market, the dividend policy of listed companies includes the company profitability, solvency and other financial indicators information, company managers convey the company's operating condition to investors through the change of dividend policy, and the formulation of dividend policy is affected by company size, equity, liquidity and other factors. By the end of 2006, China's stock market basically completed the split share structure reform, the proportion of outstanding shares appears a substantial increase, although the non-tradable shares are not yet complete lifting of the ban, but in theory China's stock market has entered the full circulation times. In the relevant legal and policy guidelines, China's listed companies has increased the level of dividend payment, but the company's independent development of awareness increased, so that listed companies are more willing to distribute stock dividend instead of cash dividends to prepare for the future development of the company's funding needs, which explains the current high transmission and distribution situation of chinese stock market.This paper consists of the following five parts: The first part is preface. This part focuses on topics of significance and background, expounds on the domestic and international status of dividend policy. On this basis, sort out the article ideas, to find an entry point for this paper. Dividend policy is one of the core content in financial management activities. After the completion of Chinese split-share reform of securities market at 2006, with domestic and abroad research results, to analyze the relationship between dividend policy and the transmission of information by empirical way, to make reasonable suggestions in order to improve our dividend policy of listed companies. That is important to Chinese stock market, as well as the long-term healthy development of Chinese macroeconomic.The second part, Theoretical Analysis of the relevant dividend policy. Before the 1970s, The traditional theory of dividend policy mainly focus on the relationship between the value of dividends with the company, forming Dividend-related theory and Dividend-unrelated theory. Dividend unrelated theory consider that In a perfect capital markets, the company's dividend policy will not affect firm value, stock prices reflect all information. Gordon Goron, J. Walter and other man-mad on behalf of the dividend-related theory believe that Perfect capital market is very difficult to achieve, a number of factors affect the stock price in market, Dividend policy triggers the stock price volatility, and affect the value of the company. From late 1970s, Western scholars change their minds, gradually begin loose the assumption of MM theory to discuss that "why dividend policy could affect a company's value" and "How to affect the company's values" to enrich and developed the theory of dividend policy, The main theory is Tax Effect Theory, Signaling Theory, Clientele Effect Theory, Agency Cost Theory, Shareholding Structure Theory, Behavioral Finance Theory. These theories study the dividend policy of the company's value from different perspectives.The third part, the status quo of dividend distribution of China's Listed Companies. The form of Dividend payments is various. Theoretically it can be divided into three kinds: Real return-type dividend, Equity-type dividend, Debt-type dividend. Compared with Western countries, Chinese dividend distribution have a distinct Chinese characteristics, except the cash dividend and stock dividend, other kinds are created, like cash and stock dividend, stock dividend and additional offering, cash dividend and additional offering, stock and cash dividend and additional offering. By collecting the relevant data, summarized the following characteristics: the distribution form of dividend is diversity, the proportion of non-distribution of dividends is still large, a larger proportion of the companies that contribute stock and cash dividend and additional offering, the expansion of Share capital is rapid, dividend policy fluctuate frequently, the lack of stability and continuity, and little differences in many industries.The forth part, reserch on the information of chinese listed companies'dividend policy. First, using improvement Lintner dividend model to verify whether the managers of listed companies in China deliver the company's future profitability information to investors by the dividend. Companies set dividend policy according to Profitability. Its dividend payout levels are determined mainly by the company's previous dividend payments and current level of profitability and the impact of changes. The effect of dividend information transfermation exist. Then, use factor analysis method, draw 12 principal components factors, through these 12 factors component regression analysis, we can find that there is a positive relationship between FAC2 and DPSA, it indicate that Company's solvency is stronger,the higher the dividends paid. There was a positive correlation between the FAC3, FAC4, FAC5, FAC7 with the DPSA. Note the stronger the company's profitability and the better its earnings quality, companies are more inclined to pay dividends. There is a negative correlation between FAC9 and DPSA, this indicates that after China completed split share structure reform in 2006, the proportion of outstanding shares increasing, the proportion of state-owned shares and legal person shares decline, the sense of independent development is stronger, so companies are more willing to retained profits for the capital requirements for future development, companies tend to pay stock dividends instead of cash dividends.The fifth part, the proposals of regulate chinese listed companies dividend policy. Although by the end of 2006, China's share-trading reform has been basically completed, which solved the structural problems of equity from the system level, but Chinese money market and capital market development is not perfect. I propose some suggestions according to the problems of Chinese current dividend distribution policy. First, with regard to system, formulate and improve relevant legal systems to enable investors to protect their own interests through the law. Broaden the financing channels to prevent the stock market becoming "means for misappropriating" market. Strengthened external regulation and restraint, reduce administrative interference and improve the information disclosure system. Secondly, with regard to the corporate governance structure, protect the implementation of shareholder's rights, Improve the supervisory system and the independent director system, improve incentives for sound corporate managers, and guide managers to maximize the interests of shareholders. Finally, regulate investor behavior, establish the correct investment philosophy, so that institutional investors become the leaders of value investing philosophy.