Research On The Dividend Payout Policy Of China's Listed Firms Based On The Life-cycle Theory

Dividend payout is the core contents of company's financial activities.To date,a variety of traditional dividend policies cannot give a reasonable and consistent explanation of the behavior of companies' dividend payouts.Under such background,life cycle theory of dividend policy quietly becoming popular in the United States and European countries.This paper examines whether the likelihood of dividend payments and the quantity of dividend payments in China are based on the life cycle theory of dividends payment using the sample of Shanghai listed firms over the period from 2003 to 2012.The likelihood of dividend payments and the quantity of dividend payments are higher among firms with larger size,greater profitability and less growth opportunities,which are three factors that mainly characterize a firm's life cycle stage.More importantly,a notable relation is significantly observed between firm's dividend payouts and its mix of retained earnings versus contributed capital,which is used as the proxy for firm's life cycle stage.Furthermore,this paper extends the existing literature by carefully including two institutional factors that may affect firm's dividend policy:the reform of split ownership structure and the regulation that connects refinancing to dividend policy.Based on the statistical results,the paper further poses some suggestions on listed firms and the regulatory authorities,which aimed at to strengthen the dividend payouts system in China's capital market and to promote market efficiency of resource allocation.