Dividend Policies Of China's Listed Companies

Dividend policy is a tactics to decide how to distribute the profit after tax between the stockholders and the company itself. As to that profit retention plays a significant role in the endogenous financing, dividend policy has a close connection with the endogenous financing. However, from the point of the economic and market influence, dividend policy reflects a companies' business behavior, and has a great influence on the companies' public appearance and the stock price. In the process of more than ten years development, for some reasons, the managers of Chinese listed companies paid little attention to the dividend policy. Seldom had them applied the modern principle and method of dividend distribution theory to the direction and manipulation of the practice of dividend distribution. Therefore, dividend policies of most Chinese listed companies appear comparatively chaotic, typically characteristic with short-term actions and leak seriousness and continuousness, which are not favorable in the further advance of the listed companies themselves and the protection of the overwhelming number of investors' legal rights, further more not helpful to the stable, healthy and orderly development of the Chinese stock market.Based on modern western dividend theories, the thesis analyzes the whole present conditions of the Chinese listed companies' dividend policies by some statistic datum, and finds a tendency which existed two years ago, that the Chinese listed companies are more and more likely to choose a cash dividend policy in a higher proportion. Then, the thesis analyzes the subjective and objective factor which result in this tendency, and goes step further to explain the deeply reason which causes the spreading out of this phenomenon through a game-theory model. At the end of the thesis, the author also gives some suggestions to solve theproblem.The thesis is composed of four parts. Part One, Modern Western Dividend Theories; Part Two, Influences of the dividend policy to the company; Part Three, Present Conditions and Problems of Chinese Listed Companies' Dividend Policies and Part Four, Determination Process of Listed Companies' Dividend policies, and Concurrently Comments on Inspiration to Chinese Listed Companies.In Part One, the thesis mainly introduces two essential points of modern western dividend theories and several commonly seen dividend distribution modes. In the process of modern western dividend theories, there is no opinion out of the two essential points, dividend irrelevance point and dividend relevance point, till today. In the first segment, the thesis introduces some explanations of the two points. Three theories are given out to explain dividend irrelevance point, the dividend remainder theory, the MM theory and the dividend neutrality theory. However the opinions against the dividend irrelevance point are mainly against the hypotheses on which the dividend irrelevance point is based. The author lists several key factors that prove that the market is not perfect. In the second segment, the thesis introduces four dividend distribution modes and shows their advantages and disadvantages through a comparison. Three key components that compose a dividend policy, time, method and proportion, are discussed in the last segment.In Part two, the author makes an exploration about the effects to a listed companies' market value of dividend policy. This part is divided into four segments. The effects exerted by cash dividend and stock dividend are introduced separately in the first segment and the second segment. The author tries to expound the importance of a companies' dividend policy through an analysis about that what and how a dividend policy effects a companies' market value. Because of the great differences between stock repurchase and common stock dividend onaspects of both decision and operation, the third segment introduces the influences of stock repurchase singly.The third part of this thesis makes a deep analysis on the Chinese listed companies' dividen...