Research On Correlation Between Dividend Policy And Enterprise Value For GEM Listed Companies

Dividend decisions along with investment decisions and financing decisions are the three major decisions in modern corporate financial management. Dividend policy ties the listed companies with the investors. The firm's dividend policy could make impact on investors' decisions therefore influence its share price as well as its market value. This correlation states clearly that an enterprise could maximize its value by choosing the right dividend policy. For the same reason, the listed companies attach great importance to their dividend policies.Growth Enterprise Market(GEM) is an alternative stock market aiming at providing fund raising opportunities for growth companies of small- to- medium sizes, which are unable to be listed on the main board. It is a key role in the capital market complementing the main board. Not many researchers have stud ied the effect of dividend policy for GEM firms due to GEM's relatively short history; yet there is no matching view on the detail of how dividend policy affects these firms value. The purpose of this study is to provide companies in GEM an effective strategy for optimizing enterprise value based on analysis of correlation between the companies' dividend policy and historical stock value data. The analysis should also help investors make more rational investments and in the end contribute to China's steady development of securities market.With in-depth review and analysis of other researches, this paper empirically summarizes the relationship between dividend policy and corporate value of Chinese GEM listed companies from 2009 to 2014 and describes the dividend distribution characteristics. The three features include the choice to pay dividend of not, the cash dividend payment level and the stock dividend payment level.The results of this study showed that for the GEM listed companies, paying dividends helps to increase their enterprise value; cash dividend payment level is negatively correlated to the enterprise value; stock dividend payment level positively affects enterprise value. At the end, this paper provides practical advice on dividend policy for GEM listed companies to optimize enterprise value, for GEM regulatory agencies to effectively regulate the market and for investors to gain long-term profit.