Research On The Relationship Between Cash Flow And Cash Dividend Policy Stability

Dividend policy has been the concern for market and investors since its emergence,it is one of the three most important financial decisions and investors do not understand the internal operation of listed companies,so the listed compan ies transfer internal information to investors through the dividend distribution,investors' view are impacted by the dividend policy of the listed company.If a listed company adopts a stable dividend policy,it is helpful to attract investors' attention and establish a stable image of the company's profitability.The stability and continuity of dividend policy is very important for investors and listed companies.The domestic scholars have conducted the research on the cash dividend policy,the research contents mostly on the factors of cash dividend payment,market effect of dividend policy,but few scholars have conducted studies on cash dividend policy stability.At the same time,the domestic research on the cash dividend policy is the mostly the profitability of the company as the base of the study,few scholars study the cash flow as the base of cash dividend policy,in fact,cash dividend is not only decided by the profitability but also by the cash flow.In this paper,based on inheriting and drawing lessons from the domestic and foreign research,2009-2015 Shanghai and Shenzhen A stock market listed companies as research samples to study cash flow and cash dividend policy stability,analyse the current situation of the cash dividend policy,put forward opinions and suggestions.The study finds that the cash dividend policy of Chinese listed company in A stock market has low level of cash dividend payment,poor continuity and unstable dividend policy;cash dividend policy stability is related to the stability of operating activities cash flow,the stability of equity free cash flow.According to the empirical results,the cash dividend policy stability is positively related to the stability of operating activities cash flow;the cash dividend policy stability is positively related to the stability of equity free cash flow;the stability of profitability affecting the stability of cash dividend policy is bigger than the stability of operating cash flow and equity free cash flow.The results of this paper extend the research of dividend policy and provide the basis for the government to formulate reasonable supervision measures and the stable cash dividend policy of listed companies.