Research On The Relationship Between Enterprise Growth And Cash Dividend

Since the reform and opening up, China’s economy has boomed and a lot of high-growth companies spring up. Thanks to these high-growth companies, Chinese capital market gets a good development. But some companies are insatiable of growth, they don’t care the interests of investors, public companies’ dividend distributions are nonstandard and random. Compared with the foreign mature capital market, the Chinese capital system are not perfect, lacking effective supervisory and restriction. Dividend policy plays a significant role in investing and financing activities, as well as in the operating activities. Researches on the dividend policy are always one of the hot areas in the finance theory. Researchers gradually pay attention public companies’ irregular dividend distributions.With the development of behavioral finance theory, scholars have found that the managers are not entirely rational, managers’ irrational behaviors will affect the company’s decisions, and overconfidence is one of the most universal irrational behaviors. Traditional dividend theories are based on the rational economic human hypothesis; they can’t provide a satisfactory answer to the anomalies in the China’s public companies. Scholars begin to study China’s companies’ dividend distributions based on the behavioral finical theory, Using the managerial overconfidence to study the cash dividend has started to become a hot topic.There are not many papers on the overconfidence and dividend policy. To replenish the research, this paper will try to study the impact of the growth on the dividend policy from the perspective of overconfidence. This paper teases the papers about the overconfidence、growth and dividend policy. After the analysis, the paper puts forward hypothesizes. And the 2010—2012 dates from Shanghai and Shenzhen listed companies are used to test the hypothesizes. The empirical study makes clear that the company’s growth is negatively related to the rate of cash dividend payout; managers’ overconfidence and cash dividend payout are positively related; What’s more, this paper tests how managers’overconfidence affects the relationship between the growth and cash dividend policy. The result is that managers’ overconfidence has weakened the negative relationship between growth and cash dividend payout. Based on this, this paper deems that in the growth of companies, we should strengthened guides and supervise, reduce the manager’s overconfidence as possible to lowest the adverse effects.