Correlation Study Between Asset Quality And Dividend Policy

For a long time, the research on the dividend policy of the company is oftenassociated with the net profit of the company, In reality, the company are earningsevery year, but they do not distribute the dividend. Some scholars believe that theeffect of the dividend signaling is break down. Some scholars propose that assetsquality is essence of the signal transmission. So this paper tries to discard the profit offinancial statements, and to study the relevance of asset quality and the dividendpolicy. This will help enterprises to pursuit of results and pay attention to asset quality.This will also help to explain the relationship that high profits and no distribution ofdividends.On the basis of many achievement about the assets quality and dividend policy,In the first, this paper presents the main content about them, then this paper presentsconnotation and feature of asset quality and the main content and types of dividendpolicy etc. In the second, this paper established a system about asset quality indicators,combined with its characteristics and the features of manufacturing industry. Thispaper chose23financial indexes represented existence, validity, profitability, securityand development of the assets quality. The core content of the dividend policy is thedividend payment rate, so it is representative of the dividend policy. Last, this paperanalyze their relevance.In the empirical part, this paper chose manufacturing listed company which wereconsecutive earnings in the past three years. First this paper used principal componentanalysis dimensionality reduction in the SPSS18.0in accordance with the fivefeatures of asset quality. Then this paper established the model of asset quality anddividend payment rate. And this paper utilized the method of grey correlation analysisin DPS software to analyze their relevance. The results show that, they have relativelystrong correlation. This shows that the efficacy and safety of asset quality are moreimportant than profitability of asset quality. This not only proves the company’sdividend policy and asset quality are related，but also finds the efficacy and safety ofasset quality have better correlation. The results show that the asset quality of the enterprise and the dividend policyof the company have a strong correlation, the dividend policy of the company not onlytransmits the company performance status but also convey the company’s assetquality.