On The Dividend Policy Of Listed Companies In China

Financing, investment and dividends are three cores in financing activities of modern companies. For decades, dividend policy has always been a brain teaser puzzling economic circle. Black called it "a puzzle of dividends" in 1976, and he remarked, "When we made more attempts to study it, it is more like a puzzle." Up to now, economists haven't found a widely acceptable answer to it. Dividend policy is regarded as a logical continuation of financing and investing activities conducted by companies, and an inevitable result of their financing activities as well. Therefore, an appropriate dividend policy can not only set up a good image for a company, but also inspire the investors to continuously invest in the company, which enables the company to obtain a steady and long-term developing condition and opportunity. By using western dividend theories for reference, the purpose of this article is to explore the actual situation and factors of the dividend policies practised by Chinese listed companies. The article is also expected to provide for dividend policy of listed companies in China with some suggestions.This article is divided into four chapters.Chapter 1 is an introduction. It mainly discusses the concepts of dividend, dividend policy and other related terms, and points out the significance of the study of dividend policy.It also puts forward that the goal of dividend policy must be obedient to the general goal of financial management, that is, the goal is to realize the maximal wealth of shareholders.Chapter 2 mainly discusses dividend theories, types of dividend policy, factors which affect dividends and how to select appropriate forms to distribute dividends. In this chapter, the author comprehensively comments on correlative dividend theory and irrespective dividend theory, and points out that the major difference between the two theories is applying different preconditions. The chapter also puts forward 4 types of dividend policy, and analyses the factors which affect dividends. Finally, it conducts a comparative study on cash dividend, stock dividend, property dividend, debt dividend and stock repurchase. Chapter 3 is the most important part of this article. The chapter describes, analyses and evaluates the actual situation, characteristics and causes of formation of dividend policy practiced by Chinese listed companies at length. It tries to conduct an evidence regarding study on market effects caused by the dividend policy of Chinese listed companies, and by comparing with the ways of distributing dividends in western developed countries, it lists the different ways of the distribution of dividends between China and America. Through a great deal of data analysis, the chapter points out the widely existing facts about the distribution of dividends: 1. The forms of the distribution of dividends are diversified; 2. The non-distribution phenomenaare widely existent; 3. There are more and more cash dividends; 4. Dividend policy is short of consistence and stability; 5. The distribution behavior of dividends is not standardized, etc. Moreover, the actual situation of the distribution of dividends in China owes to the following reasons: the unique stockownership structure of Chinese listed company; some big shareholders' misuse of authority; the immoral behavior of some agents; the refinancing of listed companies and being short of external restrictions.Chapter 4 discusses the following 3 aspects: First, Standardizes the distribution of dividends; Second, the principles that must be obeyed when listed companies make their dividend policy; Third, the content of dividend policy. The chapter puts forward the system of standardizing the distribution of dividends and the system of information exposure in order to alter the situation that some big shareholders dominate companies and realize that shareholders have the same right with the same shares. It also provides a series of suggestions on how to regulate and improve accounting measures of the distribution of dividends, on how...