A Study On Cash Dividend Policy Of Chinese Listed Companies

Dividend policy is one of the three core problems of company financial management. Since the fifties of last century foreign scholars have begun to research the factors that would influence dividend policy and a variety of dividend policy theories have been established, and the life-cycle theory of dividend policy is the latest one. The life-cycle theory of dividend policy tries to explain the differences of Chinese listed companies cash dividend policy from the company life-cycle perspective, the company in beginning or growth phase will take a low portion of earning as dividend in consideration of its future development while the company in mature phase will take a high portion of earning as dividend because it is stable in the market. Stock market in China wasn’t established until the nineties of last century, although it don’t have a long history many investors and market regulators have paid lots of attention to the listed companies dividend policy. Under this circumstance, this article tries to study Chinese listed companies cash dividend policy using the life-cycle theory and by doing it we want to get some instructive conclusions and recommendations for investors and regulators.Firstly, this article summarize the company life cycle and dividend policy theories and we have a deep understanding of theoretical basis through this process. We also have a clear understanding of current research situation by reading lots of research papers both domestic and abroad. Because the life-cycle theory of dividend policy is the latest one, we must take a good preparation about the theory and current research situation in order to use the life-cycle theory to analysis Chinese listed companies cash dividend policy.Secondly, this article uses Chinese listed companies dividend data, financial data and corporate governance data to study the life-cycle theory of dividend policy. The result shows that Chinese listed companies are inconsistent with the life-cycle theory of dividend policy. The companies in growth phase are more likely and pay more dividend than companies in mature phase, and they are both more than companies in decline phase. This phenomenon has a close connection with the characteristics of Chinese listed companies and capital market. Then this article studies which factor would influence the cash dividend policy of the company in growth phase, mature phase and decline phase. The result shows that the financial structure and profitability would not influence cash dividend policy of companies in growth phase, the financial structure would not influence cash dividend policy of companies in decline phase.Finally, this article gives some advices from the regulators’perspective in order to make cash dividend policy more reasonable. Regulators should strength the listed companies’ corporate governance and capital market laws for the purpose of making company dividend policy consistent with life-cycle theory, and companies should make cash dividend policy in consideration of its future development and investors’ benefits.