Study On The Relationship Between Listed Companies’ Financing Constraints And Cash Dividend Policy

The company’s financial management activities include four areas-financing, investment, management of working capital and distribution of profits. Financing constraints suffered by the enterprise belongs to the financing activity, and the cash dividend policy is the distribution activity. The business manager needs to consider both of them. Over the years, scholars have been done deeply research, but generally they are respectively studied. In recent years, to the studies of financing constraints, mostly scholars concentrated in the finding of appropriate standards of financing constraints and using the investment-cash flow sensitivity model to research company’s cash holdings policy. Financing and distribution activities are interrelated, so we use a combination of theoretical and empirical methods to study the relationship between them.In this article, we usesignaling theory and agency theory to analysis the affect of dividend policy to financing constraints, and at the same time we use the pecking order theory, signal asymmetrytheory andincomplete contracttheory to analysis the affect of financing constraints to dividend policy. Financing constraints are affected by the internal and external factors, and the cash dividend policy is just one of these factors. At the same time, financing constraints are more affected by the financial position, profitability, the external environment. So this paper focuses on the financing constraints on cash dividends policies. Precisely because there is a mutual relationship between financing constraints and the cash dividend policy, and China Securities Regulatory Commission issued 《Decision on amending certain provisions of the cash dividends of listed companies》 in2008which can be viewed as a cash dividend policy of the exogenous variables. This makes the study on the impact offinancingconstraints onthecashdividend policy more practical significance. We set Shanghai and Shenzhenlisted companies which belongs to2005to2010years as samples, and empirically analysis the impact of the financing constraints on the cash dividend policy, and analysis the cash dividend policy changes of different financing constraint companies after the new policy.Conclusions are listed as follows. Enterprises having low financing constraints have a higher cash dividend payout ratio than the others having high financing constraints. After the new deal, all enterprises have reduced the cash dividend payout ratio. Companies having financing constraints more significantly increased the cash dividend payout ratio after the new deal than companies not having financing constraints. According to the conclusions, I make suggests from enterprise’s and government’s aspects, such as the laws made by the government should extend the enterprise’s range, the government should make laws about cash dividend policy in different levels; enterprise should enhance the information disclosure and the efficiency of cash flows and so on.