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On the empirical analysis of listed companies' financial capacity and continuous cash dividend policy

Author: HeYunLong From: www.yourpaper.net Posted: 2009-07-07 20:50:59 Read:
Paper Keywords: financial capability of the continuing relevance of the cash dividend policy
Abstracts: This continuous dividend of listed companies of Shanghai and Shenzhen A-share cash dividend for the sample to analyze the profitability of listed companies, the long-term solvency, to obtain cash ability buckle ability sustained cash dividend policy in 1999 to 2004 . The results show that: in the the sustained cash dividend policy, the profitability of listed companies to achieve about 40% as a cash dividend to send distributed to shareholders; listed company's long-term solvency for cash and development capacity of its last cash dividend policy impact.

Theoretically factors affecting cash dividends of listed companies including the Company's external and internal factors, external factors affect its cash dividend policy has strong rigidity, most of uncontrollable factors (such as the legal system of distributed cash dividends of listed companies ). The internal factors, including the stability of the surplus liquidity of the assets, the ability to raise funds, investment opportunities, capital costs, and debt arrangements. Theoretical analysis are usually only able to draw qualitative conclusions are affected by various factors on cash dividends of listed companies, the quantitative analysis can not be carried out between cash dividends and influencing factors. Most of the listed company's cash dividend policy factors using cross-sectional data (ie, the 1-year data). Analysis from a policy point of view, the cash dividend policy should have relative stability and strong continuity, therefore, this article will examine the correlation between listed companies' financial capacity and continued cash dividend policy, which will benefit the listed companies developing its reasonable The cash dividend policy.

A literature review
Gao Xiang et al (2004) Empirical studies suggest that the main factors affecting cash dividends of listed companies in China in line with the traditional theory of dividend policy. Its analysis showed that the size of the company and the industry in which the level of profitability, debt-to-equity ratio, the equity structure of the proportion of the cash dividend payment has a significant impact. Shao Jun (2004), empirical studies have shown that the company's earnings per share, the previous annual cash dividends and ROE Cash dividends have a significant impact. The week Heart (2005) selected from the Shanghai Stock Exchange 15 from 2001 to 2003 the average annual dividend of empirical research, draw dividends of listed companies corporate net operating cash flow and cash dividends per share no significant correlation conclusion. Yang Shue (2000) to 1997 dividend dividends seven listed companies as samples to study, draw factors affecting cash dividends of listed companies, including the conclusion of the monetary fund balance. The Song Yan Mountains (2004) show that China's large-cap stocks and small cap companies cash dividends by the obvious difference between the per share net operating cash flow per share net operating cash flow of large-cap stocks amount of the the faction discount rates and Cash Dividends the impact is not significant, while small-cap stocks are more significant. The above study has some limitations in terms of variables, sample selection. For variable selection, its limitations in First select a non-objective alternative variables (such as the size of the company and the share capital of the scale variable); second is serious collinearity between variables (such as equity net profit margin and return on assets rate ). The majority of sample selection year sectional data, which makes the conclusions of the study not convincing enough. Continuing cash dividend policy of listed companies under its financial ability, financial capability, including profitability, long-term solvency, capacity development and the ability to obtain cash. Staff from the financial ability to affect the cash dividend policy of listed companies continued to select more objective variables, construct a reasonable measurement model to the 1999-2004 continuous distributed cash dividends of Shanghai and Shenzhen A-share company as a sample of financial capability sustained cash dividend policy relevance.

Second, the study design
(A) study is the financial capacity factors affect the continuing cash dividend policy of listed companies were selected to reflect the profitability of listed companies, the long-term solvency, development ability and get cash earnings per share, asset-liability ratio, the rate of capital accumulation and per share net operating cash flow of four financial indicators as explanatory variables, as explanatory variables, the continued payment of cash dividends, and accordingly propose the following hypothesis.
Hypothesis 1: The higher the Capital Maintenance and Appreciation of listed companies, the continued payment of cash dividends more
Hypothesis 2: The higher the earnings per share of listed companies. Continued payment of cash dividends more
Assumptions: the long-term solvency of the listed companies, the stronger (ie, asset-liability ratio is lower). Continued payment of cash dividends more
Hypothesis 4: The listed company's net operating cash flow per share more suppliers. Continued payment of cash dividends more
(B) the model variables set see the variables constructed following econometric model:
(C) the study sample selection according to the study, the sample of the settings selected qualification are as follows: to explain the new scene involving two variables per share net operating cash flow and capital maintenance and increment ratio, the Shanghai and Shenzhen listed companies in China from 1999 to provide cash flow table, therefore. Select the sample time span defined between 1999 and 2004; remove all the listed companies with B shares and H Yin; Discounting 1999 to 2004 between sT PT treatment of listed companies; samples in 1999 - 2004 for six consecutive years the payment of cash dividends. According to the above qualifications, the final 90 samples from 1999 to 2004 set of sample data. The data derived from CSMAR data inventory system and United Securities Information Systems.

Third, empirical research and results analysis
(A) Empirical research paper, the Eviews software on a set of sample data were multiple linear regression, such as the regression results. In addition to the explanatory variables EPS 6 consecutive years of regression results show its be interpreted variable DPS significantly outside, other explained variable cash dividend policy continuing impact is not significant with (ALR only in 2004, the explanatory variables DPS affect significantly with not coincide with the research objectives, it is no longer considered). Excluding non-significant indicators and linear regression. Eliminate the continuing impact of cash dividend policy of listed companies is not significant explanatory variables CPS, the ALR and CAR, respectively, as explanatory variables in EPS and the explanatory variables DPS linear regression, the regression results. The regression results show that the EPS t statistic and F statistic is more significant.
(B) The empirical results analysis after excluding non-significant factors, the model becomes a single explanatory variable, there is no multicollinearity problem. In addition, year by year regression using cross-sectional data, does not exist autocorrelation and the distributed lag phenomenon, only need to test the model exists heteroscedasticity can. Goldfeld-Quandt test methods heteroscedasticity test, such as test results.
Can be seen from (Table 4), the significance level of 1%, 5% and 10%, for each F statistics were less than the critical value of F, the model does not exist heteroscedasticity. In addition, the significant level of the explanatory variables EPS t statistics and F statistic test, such as test results. L/0.01/2 (NK-1) = t0.005 (90-1-1) = t0.005 (88) <60), and each year t-statistics are larger than 2.660, which shows explanation variable EPS DPS interpretation of abnormal significant (EPS estimate parameters, the error probability of less than 1%); since F0.01 (k, nk-1) = F0.01 (1,90-1-1 The) = F0.01 (1,88) 0.01 (1,60), each annual F statistic volume greater than 7.08. This shows that the model of linear regression abnormal significant effect.

Conclusions
In the the sustained cash dividend policy, each fiscal year of the listed company explained that the coefficient of the variable EPS significantly positive, the higher its earnings per share, the continued payment of cash dividends more, suppose 2 be proved. The coefficient of each fiscal year EPS were 0.3347,0.2484,0.3637,0.2828,0.7898,0.3778, sustained cash dividend policy, listed companies from 1999 to 2004 to achieve earnings per share were 33.47%, 24.84%, 36.37% , 28.28%, 78.98%, 37.78% as cash dividends faction distributed to shareholders. Excluded in the final model of the CAR, CPS and ALR explanatory variables.
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