Geographic Proximity And Dividend Policy

Dividend policy is one of three cores of modern financial arrangement, which affects the benefit of listed companies significantly, and therefore has an important position in the listed companies’ financial activities. It affects listed companies’ benefit distribution, and is also a financing strategy, and therefore is always concerned greatly by investors. Appropriate dividend policy does not only establish a positive and healthy image for listed companies, but also increases the confidence of investors, or even makes investors increase their investment and therefore companies win opportunities for sustained and stable opportunities for development.Similar to stock industry linkage, stock geographic linkage gradually arouses the concern of academics and investors. Although interest in this problem increased among foreign academic researches, domestic academic research still lack geographical significance discussion on economics. Therefore, in this paper, I use theoretical analysis, statistical analysis and empirical research method to analyze dividend data from1993to2009, and systematically examined the geographical factors which affected listed the company’s cash dividend policy. Based on information asymmetry theory, this paper tests how information asymmetry degree affect dividend policy, and try to analyze it from multiple perspectives (including the level of regional economic development, distance from financial center, property protection and entertainment cost).The study find that:listed companies in regions of higher economic development, nearer from financial center, better property protection, lower government bribery pay higher dividend. In addition, the regression analysis also verified some previous research results:companies of shorter establishment age, higher ROA, lower DE, more cash holding pay more dividends. Companies further from financial center, with more retained earnings are more likely to choose cash dividend.