Sustainable Growth Of Steel Companies And Correlation Of Cash Dividend Policy

With the complexity and intensification of the market environment, the ability of listed company to achieve sustainable development is an important research question. As is well known, the excessive growth or slow growth of business will cause problems to the enterprise. Excessive growth will cause insufficient of financial resources of company which cannot support company’s development. But if the company enlarges its scale blindly, which will have the risk of bankruptcy. On the contrast, if the growth is too slow, it indicates that the company has a surplus of financial resources which cannot be fully utilized. If this situation cannot be resolved timely, it will be out or be acquired in the competitive market. In western countries, sustainable growth problem has been widely appreciated. However, in our country, the listed company’s management doesn’t pay enough attention for this issue. Based on this situation, the problem of sustainable growth of listed companies has great significance.Dividend policy, capital structure and investment of financial management are three major policies of financial decisions. But dividend policy is an important part in the three financial management policies, which is an extension of the other decision-making. In the dividend policy, the cash dividend policy is the most important. In the two major factors (operational efficiency and financial policy) of sustainable growth, financial policies are reflected by the asset-liability rate and retained earnings rate, and retained earnings and cash dividend payout rate is opponent. Therefore, there is a relationship between cash dividend policy and sustainable growth. Specifically, cash dividend policy affects the company’s ability to obtain finance and make financial decisions. Ultimately, cash dividend policy will have the influence on sustainable growth of listed companies.Since reform and opening of policy, China’s steel industry is growing and developing rapidly, which has made progress in the production, diversification of product. However, since the financial crisis, China’s steel industry overall profit dropped significantly, and production, diversification of product a number of steel companies’profit at a loss in2009. Despite of a slight improvement in performance in the later time, but the overall performance of listed steel companies is poor growth. As a basis for industrial sectors, on the one hand, steel industry has a high industrial relevance. On the other hand, the steel industry is affected by raw materials such as iron one. Therefore, it is significant to study the correlation between steel companies and cash dividend policy.This paper selects2007-2011A-share listed steel companies as samples. Based on Van Horn’s static sustainable growth model, according to differences in growth rates to classify samples, and combining different investment opportunities in the future, this paper study the management should take rational cash dividend policy to achieve its financial and sustainable growth in different investment opportunities in the future.Empirical results show that listed companies exist irrational behavior for making cash dividend policy. In the high-growth situation, when the company has a good investment opportunity in the future, the company’s management will increase the cash dividend. On the contrast, when the company’s investment opportunity is poor in the future, the management will reduce the cash dividend. The study shows that the company’s management doesn’t consider investment opportunities to making cash dividend policy. Based on the study results, this paper analyzes irrational behavior of the listed steel companies, and proposes suggestions from behavior of investors, government departments and public company aiming at listed companies being full of utilizing cash dividend policy in order to have a positive influence on sustainable growth.