Cash Dividends Of Listed Companies In China Empirical Research

This paper consists of six parts: Introduction, historical overview of the most important theories of dividend policy, overview two works on the determinants of dividend policy conducted by western scholars, positive research on the same topic conducted by Chinese scholars, the analysis of internal and external determinants of dividend policy of our Chinese listed corporations and some suggestions on how to correct and improve the dividend behavior of Chinese listed corporations.In the first part, the author explains the definition of dividend, the forms of dividend (cash dividend, stock dividend, property dividend and liability dividend), introduce some important concepts that is related to dividend as well such as transfers from capital in excess of par to common stock, allocating new shares to original shareholders, stock repurchases and stock split. Next, the author introduces the definition and forms of dividend policy and their shortcomings and advantages as well. The main dividend policy in practice includes residual dividend policy, stable payout ratio policy, stable or continue increasing dividend policy and low regular dividend plus extras.In the second part, the author gives a historical overview of the most importanttheories of dividend policy that shapes the revolution and development of this theory. They are smoothing theory, MM Dividend Irrelevance Proposition, bird in the hand theory, tax effects of dividends, taxes and transactions costs (Clientele Effect), signaling effect and agency costs theory. These theories provide a theoretical foundation for positive research in the later part. The third and fourth parts are literature review parts. Third part looks into two works on the determinants of dividend policy. The first paper from Rozeff, 1992, describes five factors, which influence dividend policy. The second paper written by Barclay, Smith and Watts, 1995, mentions four determinants of dividend policy. The fourth part provides a literature review on the same research conducted by Chinese scholars. These two parts provide some reference for the hypothesis test in later part. The fifth part is the most important part in this paper. In this part, the author first analyzes the external factors that can bring effect on dividend policy. And then analyze the internal determinants using the multiple regression method. This paper selects the listed corporations that are absorbed into the Shanghai Securities index 180 as of Dec, 31,2002 and distribute cash dividend in 2002 at the same time. Then, the author got the following conclusion: the only two determinants that have real influence on dividend policy are return on net assets and stock price. At last, the author provides some explanation on why I accept or reject the hypothesis and give some statement on the shortcomings of my research.The sixth part is the last part of this paper. In the part, considering the actual conditions and features of Chinese stock market and capital market, combing the above analysis and positive research, the author provides some suggestions and advises on how to correct and improve the dividend behavior of Chinese listed corporations .The author sincerely wishes these suggestions and advises can bring some benefits to China SEC on how to correct and improve the dividend behavior of Chinese listed corporations.