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Does Refinancing Incentive Affect Cash Dividends Policy? Evidence from the Semimandatory Dividend Policy in China

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  • Guoying Deng
  • Shaoyang Zhao
  • Nanmiao Zhu

Abstract

We analyze the effect of a new regulation on the cash dividend policy of listed companies in China. Using data from China’s listed companies between 1999 and 2009, our empirical analysis shows that the relationship between the refinancing incentive and the cash dividend is not significant before 2001, and since the China Securities Regulatory Commission (CSRC) introduced a semimandatory dividend policy that directly related refinancing qualifications to companies’ cash dividend payments in 2001, companies with higher refinancing needs are more likely to pay or pay much more cash dividends. We also find that numerous listed companies pay dividends strategically to meet the requirement of regulation, which limited the effectiveness of the semimandatory dividend policy.

Suggested Citation

  • Guoying Deng & Shaoyang Zhao & Nanmiao Zhu, 2015. "Does Refinancing Incentive Affect Cash Dividends Policy? Evidence from the Semimandatory Dividend Policy in China," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 51(6), pages 1099-1116, November.
    • Handle: RePEc:mes:emfitr:v:51:y:2015:i:6:p:1099-1116
    DOI: 10.1080/1540496X.2015.1080499
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    Cited by:

    1. Eugen-Axel Mihancea & Marilen-Gabriel Pirtea & Florin-Claudiu Boțoc, 2021. "Bibliometric Analysis on the Recent Trends in Dividend Policy Research," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 1051-1059, December.
    2. Qiang Xu & Qianqian Hu & Tachia Chin & Chen Chen & Yi Shi & Jianxin Xu, 2019. "How Supply Chain Integration Affects Innovation in a Digital Age: Moderating Effects of Sustainable Policy," Sustainability, MDPI, vol. 11(19), pages 1-17, October.

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