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Companies listed on the moderate Dividend Policy Analysis

Author: QiuJie From: www.yourpaper.net Posted: 2009-08-06 17:30:12 Read:
[Paper Keywords] dividend policy of listed companies company value
[Abstract] based on the principle of profit maximization in economics, dividend payment as a company operating in a "factor of production inputs, the dividend payment level theoretically in the dividends paid by the marginal cost is equal to the marginal utility level, but in practice, the optimal level is difficult to determine, had no choice but to seek a moderate level of dividend payment. Moderate level of dividend payout should target debt / capital ratio under the conditions to meet the the company profitable investment demand and to achieve the lowest financing costs, ownership structure and stability, so as to realize the company more substantial increase in the value of the level of operability. In addition, the dividend policy of listed companies is the controlling shareholder of maximizing their own interests as a starting point, but also the interests of the controlling shareholder services.

Dividend policy as one of the three major financial decisions, plays a vital role in the company's business, choose the right relationship to the company financing channels open, the level of financing costs and capital structure is reasonable. Appropriate dividend policy is conducive to the stability of the shareholding structure of the Company, and to provide an effective defensive barrier face external takeover threat, is conducive to the stable and sustainable development of the company, to achieve the maximum value of the company (shareholder wealth).

Listed companies Moderate Dividend policy connotations and characteristics
Moderate Dividend policy can be summarized as follows: to meet the company profitable investment demand to achieve the lowest financing costs, stable ownership structure, so as to realize the company more substantial increase in the value of the operability dividend policy. Specifically, the listed company Moderate Dividend policy should have the following characteristics: moderate dividend policy goal is to achieve a substantial increase of the value of the company. Meet the the company profitable investment demand, reduce financing costs, shareholding structure and stability are to serve this goal. Manifestations of truth immature for China's capital market, the company's stock value, stock intrinsic value of frequent fluctuations to maximize market value "as a moderate dividend policy target operating unreasonable. It is necessary to further specifically define the value of the company.

Second, the dividend payment of utility and cost
(A) In the theory of modern dividends, issuing cash dividends various utility
(1) to reduce agency costs. Dividend agent considers dividend policy actually reflected the agency problem between shareholders of the company insiders and outsiders. Appropriate dividend policy will help to ensure that managers act in accordance with the interests of the shareholders, the so-called appropriate dividend policy, refers to the company's profits should be paid to the shareholders. Otherwise, these profits is likely to be corporate insiders abuse. (2) When fewer investment opportunities, to improve the utility of investors. Because the number of the company's cash, overinvestment, excess cash is distributed to shareholders, the shareholders can make other investments in high yield. (3) expand the financing channels. Dividend payments show the company has good prospects for development, and increase the company's share price, the issuance of new shares the placement price can be determined at a higher level.
(B) the dividend payment costs involved
(1) The tax costs. Different taxes, cash dividends and stock repurchase capital lesson in the company and investors to pay cash dividends is no longer optimal dividend policy. This shows that in the presence of differences in taxes under the premise, the company chose a different dividend payment policy, not only the market value of the company's different, but also make the company's tax burden difference. (2) increase the cost of financing. When companies face investment opportunities, due to the dividend payment, the company had to through external financing, such as the issuance of new shares, rights issue, debt, and other modern financial theory is generally considered the cost of external financing is higher than the profit retention. (3) The intermediary costs. The dividend payout, funding must employ the intermediary institutions, such as accounting firms, investment banks, and the participation of these intermediaries will involve intermediary fees.
Listed companies Moderate Dividend policy to the interests of the controlling shareholder maximizing behavior and target
In the circulation of the major shareholders equity in our current capital market environment for small shareholders, the stake of minority shareholders is relatively too low, and extremely fragmented, the general purpose of the small and medium-sized shareholders than controllability purpose. The investment stock gains capital gains and cash dividends income. In which two kinds of income in the form of listed companies in China have long cash dividend yield is significantly lower than the Western developed countries, such as the total of all listed companies tradable shareholders Weighted average cash dividend yield of 0.58% from 1998 to 2004 , 0.54%, 0.38%, 0.92%, 0.98%, 1.11%, 1.28%; the investors cash dividend income is minimal compared to the cost of its investment, then as the holders of tradable shares of listed companies, institutional investors and individuals investors, almost impossible to get their investment return on cash dividends of listed companies, it will only turn to win the post in the circulation on the market to obtain the investment yield, which is the inevitable choice of maximizing behavior of the Chinese stock market investors. Non-tradable shareholders (controlling shareholder of listed companies) generally largest shareholder, the company's important business decisions and the appointment and removal of senior management is mainly affected by the impact of non-tradable shareholders' views, controlling shareholder equity does not flow in terms of the controlling shareholder obvious defects. Accordance with the relevant provisions of the country, the state-owned shares and legal person shares can not flow in the secondary market for sale, for sale only in accordance with the law agreements. As a rational market players, the special interests of the major shareholder of implementation to determine the behavior and characteristics of the major shareholders and listed companies. Lack of effective equity exit channel, large shareholders often tend to find all possible methods to improve the performance of listed companies net assets per share, specifically the following channels: First, to improve the performance of the company, the performance is the basis of the market value of the company, the performance of improve bound to increase net assets per share; through a rights issue, issuance or issue can be converted into stocks, bonds, referred to as the convertible bonds and other forms of refinancing is generally due to the placement price and the issue price or conversion price of the convertible bonds much higher than the company's net assets per share, the result will inevitably lead to a corresponding increase in net assets per share of listed companies after the completion of the rights issue or the issuance. Moderate Dividend policy is the concept of a stage continuous. This means that for a company, moderate dividend distribution policy is not an annual concept, but should remain relatively stable in the industry cycle. However, not mean that moderate dividend policy is set in stone, with the replacement of the company's stage of development and make appropriate adjustments.
In the newborn period, the market environment in which they live can only be understood by rational expectations, but not on the market conditions, the market for products of a very accurate judgment In other words, due to the lack of experience, not on operating income accurate determination. Just created a new investment objective of the Company has determined that, do not immediately go looking for other investment opportunities may be appropriate, the proportion of profits from small, most of the profits for the distribution of dividends to attract investors concerned about the company, establish a company in the public good image. Therefore, the high flexibility to implement low shares american additional dividend dividend policy more in line with the interests of both enterprises and investors. From low dividends can Ideally operating income cash dividend, does not destroy the image of the enterprises in the public enterprises. Lot of money can be paid to shareholders of additional dividends to encourage public investment enthusiasm. From investors, under the premise of fixed income guarantees, as well as the hope of the unexpected dividend income. Both of which expressed satisfaction with the dividend policy.
In the formative years, the requirements of the expansion of the size of the company is strong, the company is facing more investment opportunities, if they can get adequate capital, the company will be able to speed up the pace of development, at the same time, the company increased profitability, the amount of profit growth year after year. At this stage, the company needs to focus on, trying to get enough of the source of funds at the lowest cost. The most effective measures is the large number of retained profits, using its own capital to avoid debt or a larger share dividends. Implement low residual dividend policy dividends whether the dividend discount model determines the value of the company is too low it? For growing the company from a practical standpoint, the relationship between dividends and share price by the company to "the development of the first , taking into account the dividends policy weaken, so the low dividend does not make price down. On the contrary, due to the company's huge development potential and profitability will lead to the actual price of the stock rises. This is not to say that the dividend decided the relationship between stock prices completely disappeared, but the price is no longer a direct dividend decided.
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