澳洲金融留學生英語essay模板下載-An analysis of profitabilityratio and the dividend payout

 

1. Introduction

No matter listed or non-listed companies, dividend policy has raise attention of corporate stakeholders. Excessive dividend distribution may affect corporate development, and even survival. Insufficient dividend distribution to shareholders may cause complain, or even disinvestment.Shareholders do not pay dividends in long term may be condemned as stingy. 

 

"The Dividend Puzzle"written by American scientist Black Fischer(1976) I read said that the more we study carefully on dividend ,the more we find it is a mystery. Miller and Modigliani(1961) published a report entitled "Dividend policy, growth and stock value" and put forward "cash dividend policy irrelevance" and since that, many western researchers  study cash dividend policy in different way and develop many theory like MM theory,followers effect, the signal theory, agency theory, behavioral theory and so on. Although the study on dividend policy is numerous, the dividend policy research has not reach on consensus.Jain and Kini(1994) responesed to this phenomenon that many public listed companies in the stock market with high profit ratio but do not pay out their profit.As the important part of the company's financial decision-making, the dividend policy has been the focus of attention from theorists and participators. Closely related to the dividend policy and shareholders own interests, the shareholders usually very concern about the company's dividend policy, especially the cash dividend payout, with strong relations to the substantive issues of shareholder returns. 

無論上市還是非上市公司，股息政策，提高企業利益相關者的關注。股利分配過多可能會影響企業的發展，甚至生存。向股東分派股息不足可能會導致抱怨，甚至disinvestment.Shareholders的長期不分紅可能在被譴責為吝嗇。

 

“股利之謎”由美國科學家黑色菲舍爾（1976年）我讀寫說，我們越仔細研究的股息，我們就越發現這是一個謎。米勒和莫迪利安尼（1961年）出版了一本題為“股息政策，增長和股票價值”的報告，并提出了“現金分紅政策無關”以來，許多西方研究者的研究現金股利政策以不同的方式和喜歡的MM理論，開發了許多理論，追隨者的影響，信號理論，代理理論，行為理論，并依此類推。對股利政策的研究雖然眾多，股利政策的研究還沒有達到consensus.Jain和基尼（1994） responesed的這種現象，許多上市公司在股市的高利潤的比例，但不支付他們的利潤。作為公司的財務決策的重要組成部分，股息政策，一直是人們關注的焦點，從理論家和參與者。密切相關的股息政策及股東的利益，股東通常非常關注公司的分紅政策，尤其是現金分紅派息，股東回報的實質性問題具有很強的關系。#p#分頁標題#e#

 

There are not enough evaluation on the listed companies, especially for those companies with a relatively small scale. And, more importantly, I consider that the profit ability ratio is one of the obviously potential facts affecting the dividend payout because corporate profit is the basement of dividend payout. In addition, if earnings and dividends have a certain relationship, investors can also forecast the cash dividend based on the intuitive performance indicators to guide their own investment. That’s why I choose this title. In this paper, I will use the actual data about the profitability ratio and the dividend payout in order to find the relationship between the listed company earnings and cash dividend payment level and judge whether the phenomenon of high profitability and low dividend is a common phenomenon.

 

2. Literature review

There are many theories on the dividend policy, and the factors affects the formulation of dividend theory is complicated. In this part, there will be a basic introduction and analysis of the above-mentioned two aspects, and forms the theoretical framework of later analysis. 

 

2.1 Dividend theory

Gordon（1962）made further research on value of company dividend model and put forword  "a bird in the hand" theory. Gordan believes that hat compared with an uncertain future capital gains income, shareholders have a stronger high dividend policy preferences. Under conditions of uncertainty in the future, the company paid dividends and profits distribution between retained earnings will affect the company's stock price. Enterprise value is equal to the sum of value of the company issuing the company's future and the present value of dividends.

Miller and Modigliani(1961) published an article entitled "Dividend Policy and Share Growth and Stock Price" in "Business Magazine" and put forward that under meeting a series of assumptions, the company's the company's dividend policy has nothing to do with the value of the company,which is known as the MM dividend irrelevance theory.They believe that investors are not very concerned about corporate dividends, when the company more profits retained for reinvestment will lead to rising stock prices, this time despite a lower level of dividend payment, investors can sell the stock for capital gains , stock returns will compensate for reduced dividends; Conversely, if the company paid more dividends, investors can buy shares paid in cash and then to expand investment, so you can achieve the same dividend policy with a low total revenue. The article published in the dividend policy research produced a significant impact upon the article published immediately aroused the academia on the relevant dividend or dividend irrelevance of heated debate, it subverts the traditional theory of the hands of a bird, the dividend would not affect the value of the company problem itself has become three decades later dividends field research.#p#分頁標題#e#

 

2.2 Factors affecting the dividend payout policy 

Many factors affect the profitabilityratioand dividend policy. We divided factors into external factors and internal fators, and external factors include legal restrictions and environmental factors, while internal factors include shareholders factors and profit ability.

 

(1) The legal restrictions

The legal limit is the premise of all policy makers. It is the first and basic thing the management should consider when they develop the dividend policy. In protecting the interests of shareholders and creditors, the relevant laws and regulations impose various restrictions on the company's dividend distribution policies,including the limit of the listed companies capital use. The payment of dividends should not reduce the authorized capital of the company (Michaely, 2000). If the company's capital has been reduced or caused by the reduction of capital due to the payment of dividends, it is prohibited.

Legal restrictions on corporate earnings mainly reflected in the revenue, the enterprises which compliance with national tax policies can be benefited by preferential tax treatment and enhance corporate profitability. Therefore, the evaluation of the profitability of enterprises is inseparable from its tax environment analysis.

 

(2) Environmental factors

The development of the national economy is cyclical, when a country's economy in a different development cycle, its dividend policy will be different(Myers andMajluf, 1984). When inflation occurs, the company's available funds will decline in purchasing power, and capital shortage comes, then companies will choose to surplus as the compensation for the loss. The purchasing power of the dividend payment will decline when the financing environment is more relaxed, more sources of financing, the balance can be larger, and then it has the financial funds to payment the possibility of dividends, so the ability of the payment of dividends will be relatively strong.

 

Environmental factors include the survival and development of enterprises favorable factors, which is called opportunity; also includes the enterprise survival and development of unfavorable factors, which is called threaten. Therefore, companies must make good use of opportunities to defuse the threaten.

 

(3)Shareholders factors

Fama (1999) believed that the company's dividend policy is ultimately decided by the board of directors representing the interests of shareholders, the interest and request of shareholders therefore cannot be ignored. Shareholders, from their own economic interests and needs, will have a definite impact on the company's dividend distribution.#p#分頁標題#e#

 

The income of some shareholders dividends are mainly from the dividend. They often requireobtaininga stable dividend. Other shareholders with more dividends are often reluctant to issue more dividendsfrom the perspective of tax avoidance. Meanwhile, shareholders' decisions on corporate earnings can make a direct impact, for example in the direction of enterprise development, business retention allocation of funds and other major decisions  have a direct impact on business operations.

 

(4)profit ability

Sales activities of the enterprise's profitability analysis is the focus of corporate profitability analysis. In the formation of corporate profits, operating profit is the main source of the key depends on the level of operating profit growth in product sales. And changes in product sales, directly reflects the operating conditions of production and economic good or bad.