On Dividend Policy Of Guangji

As one of the three major financial activities of the company,the dividend policy has been closely watched by scholars at home and abroad.A listed company should consider not only its surplus reinvestment,but also the return on dividends to investors.In the Chinese market,there is a long-term phenomenon of low dividends and no dividends.This kind of behavior not only directly damages the investment income of minority shareholders,but also conveys to the market the information that the company's operating performance is not good.To make proper dividend policy is closely related to the interests of shareholders and creditors.It is also related to the future development of the company.A good dividend policy can convey the good signal of the company's operation,enhance investors' confidence in the company's development,and contribute to the long-term development of the company.In order to encourage listed companies to pay dividends,the CSRC has issued a number of guiding policies,constraining the refinancing behavior of long-term non-dividend companies,and strengthening the information disclosure of non-profit companies.Since the implementation of these policies,cash dividends have improved significantly,and the amount of dividends has been improved in China.Significantly improved,the dividend ratio of listed companies also increased,and the industrial dividends showed structural improvement.However,the overall dividend ratio of listed companies is still low,and the continuity,stability and predictability of dividends are not high.There are still “low dividends” policy companies that have not been distributed for many years.Under the strong supervision,it's of great significance to analyse the reasons,rationality and harm of "low dividend" policy which some companies still adopt,and give suggestions to these.This paper takes the pharmaceutical manufacturing company Guangji Pharmaceutical as the research object,analyzes the motivations of the past ten years without paying dividends,and evaluates the economic consequences of the “low dividend” policy.Firstly,based on the various classical theories of free cash flow theory and agency theory,the reasons of Guangji Pharmaceutical's not paying dividends for ten consecutive years are analyzed from the perspectives of profitability,free cash flow,investment,financing,shareholding structure and internal control.Judging the main motivations,the results show that the profitability has increased in the past three years,but the stability and sustainability of earnings are not enough.Due to the single product,it needs to diversify and also a lot of liquidity for its growth period of the enterprise life cycle.However,in expanding new areas and expanding investment,free cash flow is insufficient,efficiency of using capital is low,excessive investment exists,and debt repayment pressure is high,so ability to pay dividends are not high.Combined with the company's shareholding structure,internal control,and industry characteristics,it shows that the relatively scattered equity makes the company's willingness to pay dividends not strong.The attributes of local state-owned enterprises cause the government to intervene in corporate investment behavior,and excessive investment makes companies have less free cash flow for profit distribution.At the same time,there are certain problems in the internal governance mechanism,which together lead to the long-term implementation of the low policy of Guangji Pharmaceutical,so the semi-mandatory dividend has no binding effect on its dividend policy.It's cash dividend after 10 years' not paying dividends in 2017 was the result of public supervision.In 2018,there was still no continuous dividend.The "low dividend" policy not only harms the interests of minority shareholders,but also limits company's refinancing.Guangji Pharmaceutical has never successfully refinanced in the capital market after listing for 20 years.It has failed to attempt a private placement,a share allotment,and a corporate bond issuance,which has restricted the development of the company.Finally,from the perspective of the regulatory agencies and the company itself,I propose to optimize the dividend policy and improve the company's profitability,and also provide reference for the listed company's dividend policy.