Dividend Policy Of Listed Companies In China Based On Behavioral Corporate Finance

Dividend policy, a decision on profit distribution to shareholders, is a weigh made by acompany between profit reinvestment and rewards to investors. With the rapid growth of securitymarket, dividend policy has received more attention from scholars at home and abroad. But inpractice, there are many abnormal phenomenons in dividend distribution which bring tremendousrisks to stock market.In traditional dividend theory, it is assumed that managers and investors are absolutelyrational with their judges not influenced by psychological factors as well as that they are good atquantitative analysis using mathematical models. But this assume is far from reality. Hence, itprovides no rational explanation for "The dividend Puzzle".With the rise of behavioral finance theory, behavioral corporate finance emerged as anintegration of behavior and finance. Behavioral corporate finance is a science which researchesdecision-making from psychology, sociology, behavioral aspects. In this science, comprehensivestudies have been made on the effects that managers, investors and the government's irrationalityhave given on dividend policy. Its presumption is more practical with a breakthrough of theoreticalframework and research paradigm of traditional corporate financial theory. In the dividenddistribution field, behavioral corporate finance theory has made positive argument and beneficialexploration for a range of "Financial Vision" thus fills the blank of the traditional financial theory inthis field.The special development course, characteristic of system and the equity ownership structure inour country have added to market imperfections and deviations of participants in their mind andbehavior. Therefore, with taking full consideration of China's specific conditions, this paper hasadopted sectional static study which integrates norm research and empirical research as well asdynamic study by the time series. Based on the thorough study on dividend policy situations oflisted companies in China and the application of the behavioral corporate finance as a premise, thispaper probes into the influences of managers, investors and government's irrationality on dividendpolicy and proposes corresponding measures.