Research On The Relationship Between The Dividend Return And The Firm Value Under The Long-term Perspective

Dividend policy is one of the core content of modern corporate finance theory, which has received extensive attention at home and abroad. Western countries research thorough about it and formed a series of dividend theory. While, because of the securities market has a special policy, institutional environment and characteristics of investors, western dividend theory is difficult to directly apply in China. Especially unique status and reform of non-tradable shares has a great influence to dividend distribution theory and practice in the securities market of China. Therefore it needs to be fully considering the characteristic of the securities market of China and then begin the theory and empirical study, build dividend distribution theory with Chinese characteristics to guide investors to make rational investment and promote listed companies to make reasonable dividend policy, improve the investment and financing mechanism. Very significantly, domestic scholars always use the dividend index more (for instance, if dividends, dividends per share and the dividend payment rate, etc.) to measure the dividend returns, and based which to study the effect of dividend returns to the value of the company. This approach not only ignore the long-term cumulative dividend returns, but also ignore the ordinary investors' actually cost of investment, which may lead to skew research conclusion. So it is necessary to design and adopt new indicators and based on a new perspective to study the relationship between the dividend return and the value of the company.Based on the foreign and domestic theoretical research, this paper proposes and uses a new indicators-- the ratio of the cumulative dividends to the cumulative amount of financing to measure the long term dividend returns,then we uses the data of A-share listed companies from 2003 to 2013 as the sample, do the research of the relationship between the enterprise value and the cumulative dividend returns by means of empirical analysis,and investigate Chinese investors'investment behavior character. In addition, we make a research that whether the reform of non-tradable shares and the adjustment of mandatory dividend policy will affect the relationship between the company value and dividend returns or not.The empirical results show that more cumulative dividends a company shares, the higher market value it has, which indicates that Chinese investors not only pay attation to price,but also appreciate value investment. Further, by grouping regression our study showed that dividend returns always have significantly non-linear effect on the firm value no matter the reform of non-tradable shares happened or not. To be specific, before the reform it is inverted U-shaped relationship between dividend returns and the firm value, while after the reform it is J-shaped relationship, in other words,the reform has changed the relationship between dividend returns and the firm value. In addition, before the adjustment of mandatory dividend policy it is linear positive relationship between dividend returns and the firm value, while after the reform it is J-shaped relationship, mandatory dividend policy adjustment also changed the effect of the dividend returns on the value of the company. Finally, this article put forward the corresponding recommendations in view of the regulators? listed companies and investors on the basis of the research conclusion.