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Dividend Policy Research of Listed Companies in China

Author: ChenLiHua From: www.yourpaper.net Posted: 2009-09-27 15:34:45 Read:
[Abstract] dividend policy plays an important role in the joint-stock enterprises operating decisions, the company's core financial problems. Thus the dividend distribution policy has been to pay close attention to the shares of the company's stakeholders. Text described in the introduction of the traditional and the modern theory of dividend policy and dividend policy basic types based on the focus of China's listed companies dividends distribution policy status quo, select the dividend policy should consider the factors were analyzed, and deal with the problems raised the corresponding constructive comments.
[Keywords] dividend policy of listed companies stock dividend cash dividend


The dividend policy is one of the core content of the decision-making of the modern corporate finance and sensitive issues. In the company's financial policy, the dividend policy is the focus of the relationship between the interests of listed companies, and directly affect the vital interests of the shareholders. Dividend distribution reflects not only the extent of internal financing, affect the company's financial structure and investment and financing activities, relations with the company's future, but also reflects the company's direct return on shareholder investment, impact on shareholders' investment enthusiasm and investment attitudes, more related to the healthy development of China's capital market.
Dividend policy plays an important role in the joint-stock enterprises operating decisions, and dividend policy of listed companies in China to develop widespread irrational tendency the dividend policy anomie has become China's securities market is not standardized performance, the impact of China's capital market's normal operation and healthy development. Therefore, a comprehensive, objectively reveal the existence of deep-seated problems in the dividend distribution of listed companies in China, to explore the rational dividend policy of listed companies in China, has a very important significance for China's securities market and the overall macroeconomic stability, health and sustainable development of all.

Second, the dividend policy related concepts

1 dividend. Dividends are corporate shareholders from the profits of enterprises, the return of investor capital into enterprises. Although different investors to corporate investment motives vary, but can ultimately be attributed to shareholders from the returns made by the enterprise, the dividends of shareholders. Dividends many forms typically include the dividend three kinds of actual income dividends (such as cash dividends, property dividends), an equity dividends (such as stock dividends) and liabilities.
2, dividends Policy. The dividend policy is a listed company for the target company's development as the core in order to stabilize the share price, the company's net profit (extracted provident funds) the allocation between the company and the shareholders, that the company in the reinvestment of profits and returns The trade-off between the two investors. It is only a part of the company's profit allocated, rather than the company all of the profit distribution.
In general, dividend policy includes the following five main areas: (1) the level of the dividend payout ratio, to determine dividend payment or not, as well as payment of the proportion of high and low, per the actual distribution of surplus earnings ratio to represent. The dividend payout ratio to zero, can also be a very high proportion; (2) in the form of dividend payments, that determine the manner in which to pay dividends. The common dividend payment in the form of cash dividends, stock dividends and other hybrid forms; (3) dividend payment policy, from the strategic point of view, the dividend policy can generally be divided into: residual dividend policy, fixed, or the continued growth in the dividend policy, a fixed dividend payment rate policies, low normal shares Elkanah additional dividend policy; (4) dividend program, including the determination of the date of the payment program, such as the dividend declaration date, the record date, the ex-dividend date, dividend day date determined; (5 ) dividends before the funds ready cash dividend as a dividend payment, you need to make preparations in advance of the funding sources of cash dividends affect the normal operation of the company in order to avoid the payment of cash dividends.

Three types of dividend policy of listed companies in China, and the advantages and disadvantages of

1, the residual dividend policy. The basic idea is first to leave a minute, the company net profit first meet the capital requirements of the Company (retained earnings), if any remaining, the payment of dividends; absence of residual, no dividends, dividend policy point of view, should be considered first division stay, so prefer such a policy is a funding policy, on the theory that dividend irrelevance. The biggest advantage of this policy: priority retained funds (retained earnings), which is conducive to lowering the cost of capital reinvestment, to maintain an optimal capital structure to achieve long-term maximization of corporate value. The drawback: dividends unstable easily lead to stock price volatility, and not conducive to arrange the income and expenditure of the small and medium investors, is not conducive to the company to set up a good performance image.
Fixed dividend policy. The basic point is issuing a fixed dividend every year, due to the amount of dividend payments is a priority, so the product of dividends on. This policy advantages are: (1) to the the investors operating conditions stable feeling, which will help the company establish a good performance image, is conducive to the stability of the stock; (2) to facilitate arrangements for small and medium investors income and expenses. The disadvantages are: dividend capacity and dividend payment level disjointed, dividends poor Year also pay a fixed dividend, easily lead to the company's funds shortage, serious and even affect the company's normal production and business activities, the policy requires the company to have the expected dividend capacity than accurate predictions.
3, the fixed rate of dividend payout policy. The basic point is a fixed percentage of the net annual profit as a dividend to shareholders, such as the dividend payout ratio of 40%, the net profit of one million time-division 40 million to shareholders; net profit 2,000,000 after midnight 80 million to shareholders. Obviously, contrary to the advantages and disadvantages of such a policy and a fixed dividend policy. Its advantages are: the company's profitability and dividend payment level match, reflecting the multi-Ying multisection, less profit less points, no gain, regardless of the dividend distribution principle. The main drawback is: With the fluctuations in profitability, dividends are not conducive to price stability, is not conducive to establish investor confidence, and the comparative lack of financial flexibility.
4, low normal extra dividend policy. The basic point is the company in advance to set a lower fixed dividend amount, annual pay dividends in addition to the amount of the dividend each year, is still earnings better than ample funds plus an additional dividends. The advantage of this policy is: more flexible, have greater financial flexibility; help to stabilize the share price, boosting investor confidence. The drawback: cancel the additional dividends to investors, financial condition deteriorating feeling.
Combined with the advantages and disadvantages of these dividend policy, we can take appropriate dividend policy in accordance with the actual situation of the company. For example, in the start-up phase of the company needs funds, it is possible to take the residual dividend policy;-order in the company's development, can be taken to the the low the normal plus additional dividend policy, in order to grasp more flexible funds; fixed dividend policy, just dividend capacity can be taken in the stabilization phase, and dividends are relatively stable; recession phase and need capital, can be taken to the residual dividend policy.

Fourth, the the dividend status quo of China's listed companies analysis

Marked the establishment of the Shanghai Stock Exchange in 1990, ten years, China's securities market from scratch, from small to large, the size of the market is the continuous development. Along with the constant expansion, we also note that the listed companies is in the operational mechanisms and standardized operational phase, China's securities market is still not mature enough, not enough scientific supervision, and thus the current stock market there are all sorts of problems.
1, China's listed companies ignore income distribution rights of investors are quite common. The dividend distribution policy is one of the important contents of the listed companies' financial management, dividend distribution plan should be carefully formulated. In addition to compliance with relevant laws and regulations in the development of the distribution policy, combined with the company's current situation and future development needs, the most fundamental is to take into account the interests of investors, especially small investors, because they are listed on the company's property rights owner enjoys the right to income distribution. In reality, however, the income distribution rights of small investors are often neglected. Throughout the history of China's securities market since the market opened, you can see the listed companies in the dividend distribution is often "not assigned" phenomenon exists, and there is an increasing trend, a large number of the distribution of stock dividends or rights issue as a dividend distribution making it a means of misappropriating.
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