The Study Of Listed Corporations’ Dividend Policy Based On The Catering Theory

Dividend policy is one of the core problems in the corporation finance. There aremany types of payout policy in our capital market. Cash dividend、stock dividend andcapital reserves conversion into capital stock are the three primary policies. Theadministration continues to strengthen the regulation of dividend policy， whichhas made it better， but the investors ignore the cash dividend and pay closeattention to others， which is still our unresolved problems.Considering that our market is lack of efficiency, and the behavior of investorsis irrational, all of these are fit for the catering theory’s hypothesizes, since that thisarticle tries to think about the payout policies of our listed companies from the viewof the catering theory. Whether the companies will use some policy to cater thedemand of the investors is my critical argument.This article is trying to analyze the dividend policy of our corporationsaccording to the catering theory， and concentrates on the question that whether thecompanies pay the dividend to cater the investors’ demand.Basing on the principle of the theory that the firms will consider the demand ofthe investors when they make the decision to carry out some payout policy，I analyzethe real situation of our market and put forward the hypothesizes that in the threetypes of policies the investors like the stock dividend best， but prefer the capitalreserves conversion into capital stock compared with the cash dividend. Thecompanies will use the stock dividend and capital reserves conversion into capitalstock to cater the investors， but they use the former policy more positively. I use allthe companies on the A share market as samples except some special ones(ST,*ST,PTand financial industry)to test three different payout policies from2000to2010. Ichoose the traditional factors and the payout policy premium to build up the Logitmodel. The results show robust evidence to support the hypothesizes, the firms paycash dividends without considering the investors, but cater them by using stockdividend and capital reserves conversion into capital stock, while they aren’t positiveto pay stock dividend.Then I use the results to explain our companies’ policies furthermore and suggestthat for the aim to change our firms’ present dividend policy， not only shouldthe administration reinforce the stronger regulation， but also instruct the investors to keep a watchful eye on the cash dividend.