Research On The Relationship Between The Sustainable Growth And Cash Dividend Policy

Manufacturing industry has an important position in our national economy. However, in recent years, with the of integration global economy, China’s manufacturing is subject to the impact of the international financial crisis. Thus there has been a downward trend for Chinese manufacturing industry. In this case, many enterprise managers can not take the rational financial management strategy. A part of the managers pursues rapid growth and it has resulted in the lack of internal funds. So they had to rely on external debt financing and equity financing. Capital chain has been into vicious spiral. Another part of the managers who tend to avoid risk too much implement the strategy of low growth.This would be a waste of internal economic resources, leading to their declining competitiveness. Therefore, it is very important for the managers to have the awareness of sustainable development in the process of operation, learn to balance resources of all aspects,and conduct rational management to achieve the sustainable development of enterprises.Dividend policy is a very important part in financial decision-making. If a company wants to have a scientific financial management, it has to take into account all the following parts, including the investment, capital structure and the dividend policy. There are four indicators to help calculate the sustainable growth rate, which can be divided into two categories. The net profit on sales and the assets turnover reflect the efficiency of operation. The ratio of earnings and asset liability ratio reflect the financial policy. And the two indicators reflecting the financial policy are connected closed. Simply said,the choice of cash dividend policy will affect the financing of enterprises to some extent, and it will have an impact on the long-term development of the enterprises.In this paper, through analyzing the related theory, we have chosen Higgins sustainable growth model.According to the relationship of actual growth rate and sustainable growth rate, Chinese listed Corporation of manufacturing industry in a-shares market has been divided into high growth and low growth. For each kind of growth, it has been divided into the good investment opportunities and the bad investment opportunities. Then we has made four assumptions and conduct empirical analysis. Finally we draw the conclusion that Chinese listed corporation of manufacturing industry have rational behavior in the process of the distribution of cash dividend, which has relationship of overconfidence of managers and the immature of Chinese securities market. At the same time, Chinese manufacturing industry is still in a downward trend,and this will has some impact on the cash dividend policy of listed corporation. For these problems, we should to strengthen the supervision of the cash dividend information of listed companies, improve the whole profitability level of manufacturing industry, and improve the sustainable growth consciousness of listed company. We should also improve the rational decision-making level of investors. Thus we can enhance the overall decision-making level of the companies and make them have a good prospects of development.