Dividend Policy Research Based On The Life-cycle Theory

As one of the three major financial decisions, dealing with the relationshipbetween the dividend payment and enterprise future development is dividend policy’score point. However, the lack of effective checks and balances mechanism betweenindividual investors and institutional investors of listed companies makes the listedcompany’s dividend decision-making mechanism imperfect and unstable. In order tosolve it effectively, many scholars have tried to study from different angles, but so far,they haven’t form a unified conclusion. In recent years the study of dividend policybased on the enterprise life cycle is a new trend, whose main point is that a companyshould choose the appropriate dividend policy according to different stages of its lifecycle. In order to reveal the different dividend payment policy in different life cyclestages, this paper will use the data of listed manufacturing companies in2009-2013from Shanghai a-share market.This paper combines the normative research method and the empirical researchmethod together. In the theoretical analysis part, it first summarizes two aspects ofresearch results, includes the relationship between enterprise life cycle and cash flow,and the dividend policy based on enterprise life cycle at home and aboard. Afterwards,it summarizes the cash flow characteristics in different enterprise life cycle, and theinfluencing factors of dividend policy, then concludes the different dividend policy indifferent enterprise life cycle. Well, in the empirical research part, it first classifies themanufacturing listed companies into four parts, which is based on the cash flowcharacteristics of different life cycle. Then the reasonable assumption includes profitability, growth ability etc. are made out by using the relevant theories. Finally thecharacteristics of dividend payment will and the cash dividend payment in differentlife cycle are checked out through the descriptive statistics, Logit regression etc.What’s more, the factors that affect the dividend policy choices in different life cycle stages of are also solved by the empirical research. In the end, on the basis of theempirical research, the paper put forward a series of policy suggestions from threeaspects which includes China Securities Regulatory Commission, the enterprise itselfand the investors, and after the analysis of the deficiency of this article, some futureresearch directions are prospected.After the empirical research, this paper concludes that:(1) On the overall analysis of the process, the willingness to pay dividends andthe cash dividend payment level both periodic before adding the control variables.However, the correlation of both is down significantly after join the control variables.(2) In the analysis of the process in different stages, it concludes that the factorsthat affect the choice of the tendency and the payout level are different in each stageexcept the mature enterprise level.