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Dividend policy status quo of China's listed companies analysis and recommendations

Author: ZhangZuoLiu From: www.yourpaper.net Posted: 2009-08-07 08:32:42 Read:
[Paper Keywords] the dividend policy cash dividends
[Abstract] This article by the description and analysis of the dividend distribution of the status quo of China's listed companies to reveal the problems and causes of the current dividend policy of listed companies in China, and put forward their own suggestions on how to improve, in order of listed companies help develop rational dividend policy.

The dividend distribution policy plays an important role in the listed company's financial policy, and the company's market value to achieve and maximize shareholder wealth, as well as the company's sustainable development has a significant impact. The dividend policy of the enactment of this should be the behavior of the enterprises themselves, is an equilibrium between the corporate returns investors and future development. The need to develop a certain constraint measures and the construction of supporting systems under China's current dividend policy to develop arbitrary large boot and norms has become more apparent.
One dividend distribution the status quo of China's listed companies
A dividend distribution of the number of companies in recent years, although the increase is still small, but overall. Since 1998, the number of the overall distribution of dividends not more than the maximum to reach 65.17%, indicating that there are still a large number of companies do not carry out the dividend distribution.
2. Sent the company is now in the company of the distribution of dividends proportion is still low, but the overall upward trend. 2004, can set off a wave of cash dividends.
3. Dividend payment has increased, but still generally low. Compared to Western countries, especially in common law countries, the high cash dividends, the level of our cash dividend payment as a whole is still at a low level, the average dividend of the company net profit of less than 50%.
4 The growing phenomenon of high cash dividend. In recent years, the phenomenon of "vicious dividends more serious part of the listed company's cash dividend plan beyond the affordability of the company: the per share cash dividends greater than the earnings per share of the company in recent years has been an upward trend, while operating cash flow per share zero company dividends phenomenon has also been a sharp increase. This is a dividend distribution the status quo of the above listed companies in China is completely contrary to the extreme phenomenon should arouse people's attention.
Second, China's listed companies dividend status quo causes
Many factors that affect dividend policy, both internal factors and external factors, but also between the various factors and there is mutual contact and mutual checks.
Shareholding structure is irrational. Of the shares of the listed companies in China are still tradable shares and non-tradable shares divided. Stocks in circulation right artificially fragmented non-tradable shareholders and tradable shareholders on the basis of a lack of common interests and concerns of different interests of shareholders are not unified, dividend distribution policy makers often leads to a lack of common interests guiding. The shareholding structure of state-owned shares of listed companies, state-owned legal person shares "due to the dominance of" a serious impediment to the flow of funds and the optimal allocation of resources, lead to irrational dividend policy of listed companies to form the system of incentives.
Policy-oriented impact factors of corporate finance needs. Throughout China's listed companies over the years, changes in the dividend policy, it is undeniable, policy-oriented factors have a significant impact.
The end of 2000, the China Securities Regulatory Commission requires listed companies to clear rights or issuance must meet the conditions of the cash dividend in the past three years; well as the need to focus on the cash dividend and subsequently released in May 2001, new shares issued on the audit guidance makes dividend distribution The companies have a substantial increase in 2000 and 2001.
Balance sheet events "Enterprise Accounting Standards issued by the Ministry of Finance in April 2003, provides: cash dividend before the adoption of the attention of the shareholders' meeting should be presented separately in the balance sheet of the owner's equity in the profit distribution plan, and asked adjusted retrospectively. The introduction of this criteria, listed companies can not be the man for the adjustment to the ROE, which led to a substantial increase of the proportion of the bonus issue of shares of the listed companies in 2003.
December 2004, the China Securities Regulatory Commission explicitly refi qualifications cash dividend directly linked, so listed companies in 2004 set off a new round of cash dividends boom, an increasing number of listed companies began to focus on the return for the investors. However, due to the financing needs of the high cash dividend in the number of companies also reached a new high.
Corporate governance structure is irrational. Dummy, the absence of state-owned shareholders, grasp the actual control over the management of listed companies in the hands of "internal" control of state-owned shares. Management can control resources in order to occupy as many companies will not hesitate to occupation of shareholders equity, retained profits rather than distribution of dividends in the absence of good investment opportunities.
In addition, the high speculative investment, an important factor is caused by irrational dividend policy. Investment and investment neither emphasis on the distribution of cash dividends, in essence, also resulted in a vicious cycle of less assigned or no dividends of listed companies.
Third, a few suggestions on the specification of the dividend policy of listed companies in China
Accelerate the pace of reform of the split share, to speed up the state-owned holding equity circulation. Reasonable solution to the problem of split share listed companies favor equal distribution of cash dividends, to protect the interests of the majority shareholders of tradable shares. Since April 25, 2005, the China Securities Regulatory Commission announced the launch of the split share structure reform, the share reform work, the listed company's dividend distribution policy has been significantly improved, and the share reform has been implemented in the company to take the lead to investors huge returns. At this stage, we should speed up the pace of share reform full flow as soon as possible, so that the non-tradable shares of state-owned shares, the state-owned legal person shares, truly the same shares same rights, the same shares with Lee.
2. Strengthen the legal environment of the securities markets, and regulate our dividend policy regime. We should learn from the practice of some other countries require listed companies to force through legislation in the form of cash dividends, forcing the company to treat shareholders "to eliminate the phenomenon of excessive retained earnings, should develop a clear minimum cash dividend rate, and strengthen or not to send low-faction now Now the company's information disclosure constraints to guide the company to the progressive realization of the rational dividend policy.
Major faction now matters should be made clear to the introduction of tradable shareholders class voting mechanism, so that small and medium-tradable shareholders have more right to speak for those who play certain constraints in order to achieve the purpose of refinancing the "vicious dividends listed company role. In addition, the presence of the produce, makes more cash dividends, the greater the invisible loss of investors cancel produce, will also play an important role in guiding.
3. Improve the corporate governance structure. Should improve the corporate governance structure required by the corporate enterprises the distribution provisions clearly the company's responsibilities and rights of the participants, and a clear decision-making of the affairs of the company rules and procedures to be followed, even if the owner does not intervene in the day-to-day operations of the company, but also to ensure that managers can be targeted to the interests of the shareholders and the company's profit-maximizing. Independent director system should also improve corporate governance as the external means real companies play a supervisory role, in order to fundamentally improve corporate governance.

References:
[1] of the original red flag: "Chinese listed companies dividend policy analysis," Finance Research, 2001 3
[2] Liu Fang Music: "On the listed company's dividend policy", "Friends of Accounting, 2005 6
[3] Wu Qian: "as soon as possible to establish a minimum dividend policy", "China Securities News", 2005, June 23.
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