A study on the effect of the Semi-mandatory Dividend Policy on the capital market

Abstract

To enhance the listed firms' willingness to pay out cash dividend and to improve the level of ratio of cash dividend to net profit, the China Securities Regulatory Commission has enacted six files about cash dividend policy of listed firms from2001 to 2013, which are defined “Semi-mandatory Dividend Policy” by academia‥ The policy does not stipulate the specific ratio of cash dividend to net profit but relates the level of cash dividend policy to listed firms' refinancing qualification, which has triggered controversy during its implementation. The empirical analysis selects the firms listed on the Shanghai or Shenzhen stock exchange before 2012 as samples. The analyzing year interval varies from 2001 to 2014. For building panel data model, design the willingness of paying cash dividend and the ratio of cash dividend to net profit separately as the dependent variable and the policy variable divided by year as the main independent variables with listed firms' characteristics and the industry characteristics as controlling variables.