The Research on the Influencing Factors of Dividend Distribution

Policy: Based on Empirical Data of Chinese Listed Companies in

2013-2016

Xiaohong Xiao and Chengxu Zhou

College of Business Administration, Guizhou University of Finance and Economics, Guiyang, China

Keywords: Growth Enterprise Market, Dividend Policy, Influencing Factors, Empirical Research, The R Programming

Language, Multiple Linear Regression.

Abstract: As an important content of corporate financial management, dividend distribution policy is not only the

distribution of shareholders' investment income, but also related to the company's investment, financing and

other aspects. As a new product of the capital market at home and abroad, growth enterprise market has

relatively relaxed listing conditions, which makes the dividend distribution policy distinctive. Based on the

data of China's listed companies from 2013 to 2016 on growth enterprise market, this paper uses the R

programming language for modeling, and uses multiple linear regression to study the influencing factors of

cash dividend payment level, so as to provide reference for enterprises to formulate dividend distribution

policies.

1 INTRODUCTION

Since the development of China's stock market,

random and blind have become two fatal problems in

dividend policy formulation of listed companies in

China. The problem is that enterprises cannot

properly consider dividend distribution according to

their own situation. Therefore, the research on the

influencing factors of dividend distribution policy of

listed companies has become a hot topic. Growth

enterprise market (GEM) was established in China in

1998, and because of its more relaxed entry

conditions compared with the main board market, it

provides a broad platform for many small and

medium-sized enterprises with development potential

in China. Gem has the characteristics of high growth

and high risk, and the listed companies on it have

different business nature. At the same time, the

enterprise is subject to the China Securities

Regulatory Commission's (CSRC's) strict

requirements of dividend supervision, which makes

the formulation of dividend distribution policy full of

pressure.

By reviewing the literature and related theories

(Farrar 2007,

Linzenberger 1982

) and combining

with the research theme, this paper sorted out the

factors affecting dividend distribution from the inside

and outside of enterprises, providing ideas and

theoretical basis for the study of this paper. Based on

the subdivision of the influencing factors of dividend

distribution policy, this paper systematically solves

the problem of "how much to divide" and focuses on

the main problem of what factors affect the level of

cash dividend payment.

Based on the empirical data of gem listed

companies, this paper uses empirical methods to test

the factors that affect the level of corporate cash

dividend distribution. This paper has the following

positive significance: Firstly, for enterprises, this

study provides reference value for enterprises to

formulate cash dividend distribution policies, help

enterprises improve financial management, establish

a good image, and enhance investor confidence.

Secondly, the research helps shareholders to protect

their own rights and interests, balance their own

interests, reduce investment risks, and make them

rational investment. At the same time, it can

strengthen the supervision of the public and relevant

regulatory departments on the behavior of corporate

dividend payment, further improve the governance

system, so as to achieve efficient and reasonable

allocation of social resources, and achieve economic

growth and reduce resource waste.

Xiao, X. and Zhou, C.

The Research on the Inﬂuencing Factors of Dividend Distribution Policy: Based on Empirical Data of Chinese Listed Companies in 2013-2016.

DOI: 10.5220/0011174100003440

In Proceedings of the International Conference on Big Data Economy and Digital Management (BDEDM 2022), pages 281-285

ISBN: 978-989-758-593-7

281

2 MATERIALS AND METHODS

2.1 Sample

In this paper, A-share GEM enterprises listed in

Shanghai Stock Exchange from 2013 to 2016 are

selected as research data, mainly from the CSMAR

database, and samples are screened according to the

following rules: First, companies that carry out

annual dividend distribution are selected as research

objects. Second, the data focuses on listed companies

that have distributed cash dividends. Third, ST and

PT enterprises will be excluded from the sample, for

these enterprises have been in a deficit state for years,

and the dividend policy is abnormal. Fourth, exclude

the listed companies that issue B shares, H shares and

N shares at the same time, as well as financial listed

companies such as bank securities. Finally, eliminate

companies with missing key financial data and

extreme values.

2.2 Dependent Variable

To solve the problem of "how much to divide", the

dependent variable is the distribution level of cash

dividends, that is, cash dividends per share, expressed

by CDPS. The CDPS was measured as follows: total

cash dividends divided by number of common shares.

The selection of this index mainly refers to the

research of Li et al (2018) (

Li, et al, 2018

2.3 Independent Variable

The shareholding concentration is mainly based on

the research of Zhang (2017) (Zhang 2017), using the

shareholding ratio of the largest shareholder for

measurement (SH1).

The index selection of enterprise scale, liabilities,

development capacity and business capacity mainly

refer to the research results of Crutchiey and Hansen

(2017), Ma and Ye (2016), Yang et al (2018)

(Crutchely 2017, Ma, Ye 2016, Yang, et al, 2018).

We choose total assets (natural logarithm), asset-

liability ratio, main business income (natural

logarithm), accounts receivable turnover and

inventory turnover to measure respectively,

expressed by LN(A), DEBT, MBRG, ARTrat, ITO.

Profitability mainly refers to the research of

Sheng (2004)

[8]

, and chooses earnings per share

(EPS), and net asset value per share(NAPS) as

measurement factors.

The measurement of corporate cash flow capacity

mainly refers to the research results of Li et al (2018)

(

Li et al. 2018

), adopting indicators such as net cash

flow from operating activities per share (OpeCFPS)

and return on cash from asset operations (OpeCass).

The measurement of investment value mainly

refers to the research results of Yang et al (2018)

(Yang, et al, 2018), and adopts price-earnings ratio

(PE).

Specific indicators and measurement methods are

shown in Table 1.

Table 1: Variable Definitions.

Type Name Abbreviation Measure

dependent

variable

Distribution Level of

Cash Dividends

CDPS

Total cash dividends divided by number of

common shares

independent

variable

Shareholding

Concentration

SH1

Number of shares held by the largest shareholder

divide

y total share capital

Enterprise Scale LN(A) Take the natural log of total assets

Liability Situation DEBT Total liabilities divided by total assets

Development Capacity MBRG Take the natural log of main business income

Business Capacity ARTrat

Main business income divided by average accounts

receivable

ITO Main business cost divided by average inventory

Profitability EPS Net profit after tax divided by total equity

NAPS Total net assets divided by total equity

Cash Flow Capacity OpeCFPS

Net operating cash flow divided by total capital

stoc

OpeCass Net operating cash flow divided by total assets

Investment Value PE Market price divided by earnings per share

Industry Ind

If it belongs to this industry, the value is 1;

otherwise, the value is 0

Year Year

If it belongs to this year, the value is 1; otherwise,

the value is 0

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282

2.4 Model

This model is to test the influence of factors on the

cash dividend payment level of GEM listed

companies in China.

CDPS

,

=β



+β



SH1

,

+β







,

+β



DEBT

,

+β



MBRG

,

+β



ARTrat

,

+β



ITO

,

+β



EPS

,

+β



NAPS

,

+β



OpeCFPS

,

+β



OpeCass

,

+β



,

+Year+Ind

+μ

,





Among them, CDPS

,

represents the delivery rate,



represents the intercept term, represents the

regression coefficient, representing the influence

degree of each factor on CDPS

,

, μ

,

represents the

random error term.

3 RESULTS AND DISCUSSION

3.1 Basic Statistics

In order to understand the statistical characteristics of

variables, descriptive statistics were conducted for

them. The specific data are shown in Table 2.

Table 2: Statistics and Correlation of Variables.

Minimum Maximum Mean Std. Deviation

CDPS 0.002 9.992 2.336 3.334

eCass -0.354 0.488 0.037 0.071

SH1 4.150 89.850 32.111 12.905

LN(A) 18.961 24.448 21.147 0.780

DEBT 0.011 9.935 0.989 2.097

MBRG 15.742 24.807 20.258 0.883

ARTrat 0.204 67.662 4.626 5.821

ITO 0.000 79.190 5.152 7.933

EPS -9.320 9.790 0.707 1.401

NAPS 0.752 31.544 4.953 2.572

eCFPS -12.773 9.997 0.408 2.598

PE 28.503 281.402 82.383 39.975

3.2 Regression Analysis

Multiple linear regression was performed for all

variables, and the results were obtained as shown in

Regression 1 in Table 3.

In the equation, the regression coefficient of

LN(A) is -0.166, indicating that the enterprise size is

negatively correlated with the level of cash dividend

payment. The regression coefficient of DEBT is -

0.083, indicating that corporate debt is significantly

negatively correlated with cash dividend payment

level. The regression coefficients of EPS and NAPS

are 5.295 and 0.263, indicating that corporate

profitability is positively correlated with corporate

cash dividend distribution level. The regression

coefficients of OpeCFPS and OpeCass were 0.139

and 0.004 respectively, indicating a significant

positive correlation between cash flow capacity with

explained variables. The regression coefficient of PE

is 0.011, indicating that corporate investment value is

significantly positively correlated with the level of

corporate cash dividend payment.

By comparing the standard coefficient, it can be

seen that earnings per share is the largest explanatory

variable of the coefficient, and net asset per share is

the second explanatory variable of coefficient. In

addition, the two indicators of profitability have the

highest influence on the explained variables, and their

coefficients are both positive, which indicates that

corporate profitability has the most important

influence on the level of cash dividend payment, and

it is positively correlated with it. Enterprises with

higher profitability have higher capital abundance,

which provides a strong guarantee for cash dividend

distribution.

The Research on the Inﬂuencing Factors of Dividend Distribution Policy: Based on Empirical Data of Chinese Listed Companies in

2013-2016

283

In order to verify the stability of the conclusion,

the index was replaced. Logarithm of total assets (LN

(A)) was replaced by logarithm of total equity (LN

(S)) and the asset-liability ratio (DEBT) was replaced

by the current ratio (CR). What’s more, we also

replace two earnings measures with return on equity

(ROE), and price-earnings ratio (PE) with price to

book ratio (PB). The indexes replaced above were

regressed again, and the results were shown in

Regression 2. In addition, we replace the logarithm of

main business income (MBRG) with the growth rate

of net profit (NPGR) and then make a regression

again, obtaining the results in regression 3. The

results show that there is no significant correlation

between the level of cash dividend payment and the

operating capacity of GEM listed companies.

Table 3: Results of Regression Analyses.

Variable Re

ression1 Re

ression2 Re

ression3

(Constant) 11.821 8.324

***

9.307

SH1 -0.005 -0.002 -0.003

LN(A) -0.166

***

-0.102

***

DEBT -0.083

-0.029

***

MBRG -0.105 -0.351

ARTrat 0.007 0.005 0.011

ITO 0.006 0.024 0.017

EPS 5.295

***

0.168

***

NAPS 0.263

***

0.013

***

eCFPS 0.139

***

0.017

***

0.047

***

OpeCass 0.004

***

0.052

***

0.018

***

PE 0.011

***

0.037

***

CR 0.047

LN(S) -0.017

***

ROE 0.024

PB 0.154

***

NPGR 0.259

𝐑

𝟐

0.823 0.842 0.811

F-statistic 116.265

***

158.963

***

129.452

***

3.3 Robustness Checks

In order to ensure the reliability of the research

conclusions, we conduct a robustness test by reducing

the sample size. Specific robustness test results are

shown in Table 4. The test results show that the

conclusion is reliable and the model is robust.

Table 4: Robustness Checks.

Dependent Variable: CDPS

Variable

Unstandardized

Coefficients

(Constant) 5.339

SH1 -0.009

Ln(A) -0.008

***

DEBT -0.035

***

MBRG -0.112

ARTrat 0.011

ITO 0.005

EPS 0.156

***

NAPS 0.118

***

OpeCFPS 0.036

eCass 3.983

***

PE 0.006

***

4 CONCLUSIONS

Through empirical analysis, this paper draws the

following conclusions: The financial indicators that

affect the level of cash dividend payment of GEM

listed companies mainly include price-earnings ratio,

net asset value per share, net cash flow generated by

operating activities per share, total asset logarithm,

earnings per share and asset-liability ratio. It shows

that the investment value, profitability, cash flow,

enterprise size and debt have a significant impact on

the cash dividend payment level of GEM listed

enterprises in China. Among them, corporate

profitability is the most important factor determining

the level of corporate cash dividend distribution, and

it is positively correlated with the level of cash

dividend payment. Enterprise size and liabilities are

negatively correlated with corporate cash dividend

distribution level, while enterprise investment value

and cash flow are positively correlated with corporate

cash dividend distribution level. However, the

shareholding ratio of the largest shareholder, revenue

logarithm of main business, receivables turnover and

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284

inventory turnover have no obvious influence on the

dividend payment level of GEM listed enterprises in

China.

Based on the above conclusions and analysis, this

paper will start from the internal environment of

enterprises, put forward some suggestions on some

irregularities in the current dividend distribution

policy of my country's GEM enterprises, strengthen

self-construction, improve self-quality, and carry out

continuous optimization and innovation to realize the

standardization of policies, healthy.

Corporate profits are the main source of dividend

distribution. Since cash dividends are significantly

positively correlated with profitability, GEM

companies as market players should strengthen their

own innovation and construction capabilities and

management level for the purpose of improving their

own profitability, and establish and improve. The

performance evaluation system of listed companies is

used to monitor the performance of listed companies

during the event, improve the corporate governance

structure, invest in research and master core

technologies in their respective fields, innovate new

products, use it as the core competitiveness of the

company itself, and continuously increase efforts to

invest in the market development, is committed to

building the brand effect of the enterprise, according

to its own strategic planning, while paying attention

to the quality of profit, pay attention to the effective

control of the adequacy of cash flow generated in

business activities, so that a large amount of surplus

generated by the enterprise can bring real cash flow,

thereby reducing the pressure on companies to

formulate dividend policies.

According to the above research results, the

investment value of the company itself will affect the

formulation of the company's dividend distribution

policy. Therefore, it is necessary to improve the

internal control system, improve the effectiveness of

internal control, provide a strong guarantee for the

transparency of corporate information disclosure,

reduce related problems with no substantive content,

formalism, and empty responses, strengthen its

transparency, and increase efforts to develop capital

market, adjust the enterprise's own management

mode, production mode, etc., continuously improve

the ability to respond to the market, better understand

and grasp the market operation, enhance investors'

information about the enterprise, thereby improving

the investment value of the enterprise itself.

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