Research Of The Influence Of Cash Dividend Policy On Various Kinds Of Institutional Investors

Since the first fund set up in1998, the scale of institutional investors hasexperienced a substantial rise. Up to December31,2013, the proportion of themarket value of A shares held by institutional investors has reached10.87%. Itshows that the behavior of institutional investors plays an important role inChinese stock market. And at the same time, dividend policy is a hot issuediscussed by scholars both at home and abroad. But the conclusions vary withregions and time. This makes us come to realize that it is important to find out theinstitutional investors’ preference on dividend policy in the particular economicenvironment in China. This paper aims to study the impact of dividend policy onthe behavior of heterogeneous institutional investors, and find out the preferenceof them. Finally, we will offer some proposals to improve the dividend policysystem in China.We analyzed the characteristics of various institutional investors based onthe dividend theories, and we also elaborated the current situation of the dividendpolicy and institutional investors. Then we put forward5hypotheses to find outwhether institutional investors have different preference on dividend policy, anduse the data of972listed companies from year2000to2013to test thehypotheses. Finally, we got the following conclusions:Firstly, the documents issued by regulators have a great impact on thedividend policy of listed companies.Secondly, the cash dividend distributed by listed companies is relatively low.It is unprofitable to just rely on cash dividend income without considering capitalgains.Thirdly, the listed companies are improving their dividend policy. They tend to pay more attention to pay back to the investors.Fourthly, institutional investors prefer different kinds of dividend policy.Funds, insurance companies, pension funds and QFIIs prefer dividend policy ofhigher frequency, higher payout ratio and higher value. Whereas,common enterprises, non financial listed corporations and sunshine private fundsare inclined to dividend policy of lower level.Fifthly, institutional investors prefer dividend policy of different stabilitylevel. Funds, insurance companies, pension funds and QFIIs prefer dividendpolicy of higher stability level. However, common enterprises, sunshine privatefunds and banks are inclined to dividend policy of lower stability level.Finally, institutional investors have different kinds of preference on returnrate of dividend and capital gains. They can be divided into four categories asfollowed. First, those who prefer higher return rate of dividend and are sensitiveto capital gains. This kind of institutional investors includes common enterprises,insurance companies, pension funds, QFIIs and non financial listed corporations.Second, those who prefer higher dividend yield, but are not sensitive to capitalgains. This kind of institutional investors includes brokers and finance companies.Third, those who prefer lower dividend yield, but are sensitive to capital gains.This kind of institutional investors includes funds and trust companies. Fourth,those who prefer lower dividend yield, and are not sensitive to capital gains. Thiskind of institutional investors includes sunshine private funds, banks andsupplementary pensions.