An Empirical Research Of Cash Dividend Policy Of Listed Companies Under Firm Life Cycle Theory

The dividend policy is one of the core content of modern corporate finance activities and it is a trade-off for the companies between reinvesting profits and returning profits to the investors. Many scholars have been trying to make research on dividend policy from different perspectives for a long time, and put forward a number of theories respectively. However, these studies have not given consistent and convincing conclusion so far. Life cycle theory of dividend policy is on the rise in recent years, and it is able to explain the different dividend policies of the listing companies. Its main point is that the companies in different phase of enterprise life cycle should implement corresponding dividend policies. This paper focuses on the relationship between enterprise life cycle and dividend policy, trying to reveal the differences of China listed companies’dividend policy in microcosmic view based on the theory of enterprise life cycle, and using an empirical way to examine the influencing factors of the dividend policy during each phase of the enterprise life cycle.Firstly, this paper reviews and summarizes various theories of dividend policy in the west as well as domestic scholars’research and highlights scholars’research of dividend policy based on a new perspective of the enterprise life cycle theory. Secondly, we make a statistical description and analyze the characteristics of dividend payout of the listed companies in China by choosing their dividend distribution data. Next, we build an optimal model of dividend policy based on maximization of company’s value, which combines the optimal dividend policy of a company with its life cycle very well. And we conduct an analysis of the dividend distribution behavior of different life cycle and influencing factors of the dividend policy, and then put forward the corresponding assumptions.Based on enterprise life cycle theory, this paper uses the sample of A-share companies listed in SZE and SZSE from2001to2010and takes RE/TE as the proxy variable of firm life cycle to empirically analyze cash dividend policy of China’s public companies with panel logit and tobit model. It is shown that the probability of cash dividend payout is positively related to the ratio of retained earning to contributed capita, that is to say. the cash dividend policy of China’s listed companies is featured by life cycle. Specifically, the probability of cash dividend payout is positively related to the variables of profit rate to total asset, total assets of the company, net cash flow per share, whether it is state-controlled, as well as the largest shareholder stake, and negatively related to the company’s growth and asset-liability ratio. However, the proxy variable of the life cycle-RE/TE has not significant relationship with the cash dividend payout ratio.Theiefore. Securities Regulatory Commission should take life cycle into consideration when making cash dividend policy of listed companies. In addition, they should urged them to improve the dividend policy and decision-making mechanism, enhance the transparency of dividend policy, and actively guide them to establish a scientific management mechanism of profit distribution.