The Factors That Influence The Cash Dividend Policy Of Blue Chips In Our Country

This paper wants to study the factors that influence the dividend policies of blue chips in our country. Because of its low risk, high liquidity, blue chips are the most familiar investment subject for investors in China. So, what are the factors that influence their cash dividend policies. This is the problem the paper will focus on. In the first part, we will introduce the problem this paper will focus on and the method we use. In the second section, we will introduce some concepts and theories about dividend policy. The third section is a literature review, where we will summarize the results of previous studies. In the fourth section, we construct a game theory model based on free cash flow hypothesis to show the possible effect of strengthening investor power on dividend policy. In the fifth part, We use the panel data of 2008-2012 CSI 300 to examine the influencing factor of whether pay cash dividend or not and the payout ratio of blue chips in China. The sixth section is conclusion and policy recommendations.Specifically, this paper aims to verify whether cash dividend policy of blue chips in China follows three modern dividend theory:the signal theory, free cash flow hypothesis and life cycle hypothesis. In addition, we want to verify the effects of different types of actual controller, raising invest power and the act issued by Securities Regulatory Commission in 2012 on cash dividend policy. Through empirical research, we find the following new conclusions:with the increase of speaking power, investors and institutions in China prefer to have high cash dividends. Different types of actual controllers will not influence the possibility of paying cash dividends of blue chips significantly, but will affect the payout ratio significantly. Relatively speaking, the companies controlled by the government have lower payout ratio, while the companies controlled by foreign institutions have higher payout ratio. The act issued by Securities Regulatory Commission in 2012 do raise the payout ratio and the probability of paying cash dividends significantly.