Research On Listed Companies' Cash Dividend Policy In China

Dividend policy has been always discussed heatedly in the field of corporate finance, and the cash dividends are also one of the hottest topics in China for both investors and researchers. The payment of cash dividends has been through a checkered past. At the very beginning, companies like to choose a high payment policy, while later becoming meaner and being regulated by CSRC(China Securities Regulatory Commission). The cash dividend policies of listed companies are getting more reasonable and mature. At this background, the paper chooses cash dividend policy as the research topic. Firstly, the paper has reviewed the cash dividend policies, and analyzed it from two perspectives:the agency theory and the signal theory. Based on analysis, the author pointed out that the signal theory is more suitable for Chinese market. The paper was followed by empirical analysis. A model has been set in order to check what factors determined the cash dividend payment policy and what the relationship is. Three basic factors are included in the model: earnings, stock liquidity and capital structure. Based on data of A-share market, the author has reached the following conclusions:firstly, the correlation between earnings and cash dividend payment remains positive; secondly, the correlation between capital structure and cash dividend payment is negative; and thirdly, there is no evident relationship between stock liquidity and cash dividend payment. At last, based on above analysis, suggestions are proposed.