The Motivation and Factors of Determining Dividend Policy
论文作者:51lunwen论文属性:硕士毕业论文 dissertation登出时间:2009-06-05编辑:fic点击率:7255
论文字数:13814论文编号:org200906050056062811语种:英语 English地区:英国价格:$ 88
关键词:irrelevance theoryAgency costClientele effectEarning levelFirm sizeHypothese formulatingSample designdividend modelmultiple regression method
Contents
ABSTRCT
Dividend policy has been an issue of interest in financial literature. Western corporate finance researchers study dividend policy dates from 1950s, and their research is tending toward considerable perfection and mature now. Unlike western countries, in China there is an emerging stock market in his teens, which leads to the same research issues are quite different from those of the developed countries. As a matter of fact it surely lacks of applicable dividend theory suit for the China’s realities. In order to resolve above research gap, according to the research plan, this study will summarize the motivation of dividend policy in China stock market.
Following Miller and Modigliani's (1961) pioneering dividend irrelevance theory, many studies seek to explain corporate dividend policy. Counter to Miller and Modigliani's conclusion, researchers argue that a firm's dividend policy may have real economic consequences due to several elements Lintner (1962) and Gordon (1963) argue that the investors do not want to take risks. Therefore valuing a payment of expected dividends more highly than a payment of expected capital gains because the dividend component. A tax-adjusted model had been developed by Farrar and Selwyn (1967). They assume that investors will normally maximize after tax income. And this model contends that no dividend should be paid and the share repurchase should be used to distribute corporate earning. Litzenberger (1979) and other scholars contend that the dividend policy should be adopted as a signaling mechanism; the firm value is changed by through the dividend policy affect the income tax. On the other hand, if the margin tax rate of investor is higher than the long-term capital gains tax rate, the investor is willing to reinvest instead of gaining cash dividend. Another dividend policy hypo
thesis suggests that dividend policy is affected by other market imperfections such as information asymmetries and agency costs, Jensen (1986). Lazo (1999) finds that companies (90%) use dividends as a signal of their future earnings. They are very reluctant to cut dividends, regardless of the purpose for such a cut. Even when the companies initiate stock buyback program, they do not reduce the dividends to support the repurchase. 75% of the firms have actually increased their dividend payments. Koch and Shenoy (1999) study finds that both dividend and capital structure policies of the firm interact to provide significant predictive information about future free cash flows of the firm. Thus, strong information effect has been observed for both over and under investing firms than for value maximizing firms.
This
dissertation investigates the dividend policy of listed companies in China by used empirical study method. This dissertation purpose tries to answer following questions: Which dividend policy the listed firms adopted? What are the incentives for listed firms in China to distribute dividends?
This study chooses 40 listed corporations in China in 2002 and 2003 as samples and adopts correlation method and linear regression in empirical study on their dividend policies. The aim is to probe into relations between different policies and research on how these factors influence dividend policies and what are the motivations for the decision making.
ACKNOWLEDGMENT
CONTENTS
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