Analysis Of Factors Affecting The Likelihood Of Paying Cash Dividends Of Listed Companies In China

The past 19 years have witnessed Chinese stock market's development from the have-nots to the haves, from small to big. Up to 2009, the number of listed companies in Chinese stock market amounted to 1619, with an aggregate value of listed stock of 20.51 trillion. So far, Chinese stock market has taken place of Japan's as the world's second largest capital market, meanwhile the world's largest capital market among emerging markets, and one of the most active capital markets around the world. However, compared to western stock market, defects still exist.As an important field of corporate finance, dividend policy has been taken emphasis on for long. As long as Joint-stock company exists, research on dividend policy will last forever. Not a reasonable dividend policy can set up an outstanding image for the company but can also stimulate the investors'passion for persisting investment. However, for some reasons, dividend policy of listed companies in our stock market is not that normative. Research shows most listed companies in our stock market seldom paid cash dividends and about two third of them never paid before 1999.1n 2001, The China Securities Regulatory Commission enacted "Administration of Offerings of New Shares by Listed Companies Procedures", which indicates "the company did not distribute any dividends or bonuses during the most recent three years and the board of directors failed to provide a reasonable explanation". From then on, research on cash dividend policy increased gradually.This paper conducts an empirical study using Logit regression to examine the impact of the factors on the probability of paying cash dividend. Our sample period covers the 2000-2005 periods. The main contribution of this paper to the literature is to document evidence that cash-flow uncertainty is also a key determinant of the probability of paying cash dividend. This paper can be divided into five chapters, as follows are its structure and main points.Chapter 1 is the introduction, which introduces the background, purpose and main contents of the paper; Chapter 2 is the literature reviews, which reviews the international and domestic researches on the affecting factors of the dividend policy. Chapter 3 defines some relevant concepts and describes the present situation of cash dividend distribution in Chinese stock market, then analyzes the affecting factors of the probability of paying cash dividend. Chapter 4 conducts empirical analysis, meanwhile indicating that cash-flow is also a key determinant of the probability of paying cash dividend. Chapter 5 gives the suggestions.