China's Gem Listed Company's Dividend Policy Research

To support emerging small and medium-sized enterprises(SME), especially thedevelopment of high growth small and medium-sized enterprises, the Chinesegovernment decided to set up growth enterprises market(GEM) in2009to normalizethe direct property market and provide a direct financing platform for small andmedium-sized enterprises which are not qualified to enter the SME board. Whileaffirming the diversified development of China’s stock market, we have to be fullyaware that compared with the mature capital market of western countries, China’sstock market still has much room for reform in legislation, supervision, normalizationand operation. In which, the most prominent problems are the non-normalizeddividends of distribution, lack of consciousness in paying dividends initiatively, theamount of financing is far more than the amount of returns, non-stability andcontinuity of dividend distribution. Similarly, the above problems are quite commonin China’s GEM. Therefore, it’s necessary to conduct further study on the dividendpolicy of China’s GEM listed companies. Compared with foreign numerous dividendtheories and empirical studies, this author considered that China’s dividend policystudy is still in its infancy. The GEM focused on this text has placed the hope of highgrowth and high dividends, but how its real dividend distribution is and what theinfluencing factors are? This is what this paper will study.This author firstly made a detailed analysis on the characteristics of dividenddistribution of China’s listed companies on the GEM in the second part:1. Listedcompanies on the GEM still have non-distribution phenomenon;2. Listed companies on the GEM prefer to the dividend way of cash dividend and turning point increase;3.Low dividend payment proportion. Then, this author made qualitative analysis on theinfluencing factors for dividend policy plans of listed companies on GEM board ofdirectors from the financial restraint, dividend policy of companies’ current periodand previous period, and external supervision policy. In the following process ofquantitative analysis, this text has adopted stock investment, econometric and otherbasic theoretical knowledge of relevant disciplines, and has put forward16hypothesisaccording to company’s profitability, growth ability, company scale, equity structure,debt levels (short-term and long-term liability), cash flow condition, earning quality,industry category. Meanwhile, this text has conducted empirical study by virtue ofExcel2003, SPSS12.0, Eviews5.0and other softwares on the influencing factors ofwhether listed companies on the GEM have distributed dividends in those years andthe empirical result are: company’s earning performance and cash flow condition arethe main influencing factors for whether listed companies on the GEM havedistributed dividends in those years; while the relevant factors to influence ourcountry’s listed companies on the GEM to formulate cash and stock dividend policyare profitability, growth ability, company scale, short-term debt and long-term liability.This text has studied the difference of dividend payout ratio through distinguishingindustry in the last part of empirical study and it turns out that the dividend paymentlevel of different industries on GEM has no significant difference, this may be causedby the too short establishment time of GEM, high concentration of industry categoryof listed companies on the GEM, which result in insufficient or unreasonable sampledata. On the basis of summing up the study conclusions, this author has put forwardsuggestions for GEM on how to optimize the current dividend policy in the last partof this text:1. Set up a sound GEM delisting system to restrain over speculation;2.Strengthen and refine the lower limit of payout ratio policy of listed companies on theGEM;3. Strengthen the appropriateness management on GEM investors;4.Strengthen the supervision measures on GEM executives’ monetization. The abovespecific measures are of full maneuverability, which can provide some beneficialsuggestions for the formulation of dividend policy of listed companies on the GEMand provide corresponding basis for government supervision departments toformulate policies for normalize the dividend distribution action of listed companieson the GEM and provide certain references for vast investors’ decision, especially formedium and small investors.