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An Empirical On Catering Theory Of Cash Dividend Payout Of China’s Listed Companies

Posted on:2015-11-21Degree:MasterType:Thesis
Country:ChinaCandidate:Y YangFull Text:PDF
GTID:2309330467976439Subject:Finance
Abstract/Summary:PDF Full Text Request
The dividend policy of the listed companies remain to be the focus of all walks oflife for a long time, but why are the listed companies willing to pay a dividend?Traditional financial theory can still not perfectly explain the "dividend puzzle"phenomenon. The American scholars Baker and Wurgler(2004) proposed dividendcatering theory based on the behavioral finance which loosened the precondition aboutthe "market efficiency hypothesis" in the MM theory and analyzed if management couldmeet the needs of investors from the investors’ perspective. The theory told us thatgiven efficient markets, cash dividend payout depends on the companycharacteristics,whereas if the market is not strongly efficient, rational managements willcater to investors on their changing dividend preference in order to increase the stockprice. They concluded through the empirical studies that the catering theory canperfectly explain the cash dividend policy of the American stock market.However,catering theory can not explain cash dividend policy of the listed company inChina as well as that of list companies in America,because of the significant differencesof securities market between the two countries and the different data sample and firmcharacteristics index chosen by different scholars. Based on the above facts, this paperwill verify the applicability of the catering theory in China’s securities market and test ifcatering theory can explain the current situation of cash dividend payout in China’slisted companies.The paper is divided into five parts. The first chapter generally introduces thebackground and significance of the views in the paper, summarizes the research statusof dividend catering theory at home and abroad, and briefly introduces the researchdirection and content of this paper. The second chapter tells us the main contents of thedividend catering theory including backgrounds, content summary, hypothesis andtheoretical model, and analyzes the advantages and drawbacks of the theory. The thirdchapter gives us a detailed analysis of the dividend payout of the listed companies in China based on the catering theory. It introduces the current situation of China’s listedcompanies to pay cash dividends, and then tests the explanation ability of the cateringtheory provided the status of dividend payout of China’s listed companies. The fourthchapter mainly applies the Logistic model to empirically study whether the theory canexplain China’s cash dividend payout. It turns out to be that the cash dividend payoutwillingness and cash dividend premium have similar trends,that is, higher cashdividend premium is, more willing companies are to pay the cash dividend and viceverse.Thus it draws conclusion that the dividend catering theory has a very goodexplanation ability to the cash dividend policy in China. Finally, the fifth chapter drawsthe conclusion and puts forward several counter measures and suggestions to the cashdividend decision of the listed companies in China.
Keywords/Search Tags:catering theory of dividend, tendency to cash dividend payout, dividend premium, willingness to pay cash dividend
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