Research on Relationship between Dividend Policy and Enterprise Value of Public Companies in China
ABSTRACT
Dividend policy is one of the core financial policies in public companies and an inalienable part of the enterprise financing decision. It will relate the shareholder wealth, the welfare level and the company’s future development. Reasonable dividend policy may reduce the average capital cost, optimize its capital structure, enhance the capital efficiency and raise the company value. The enterprise value is the real reflection of the enterprise, and it is also one of the domain core concepts of financial management. Dividend policy is an important factor which affects the enterprise value. No matter, both have very complicated relationship. Joint-stock enterprise should make the decision on the reality and choose the right policy that adapts to the enterprise’s economic development.This article will analyze the present situation of dividend assignment from the relationship between dividend policy and enterprise value, analyze its reason and propose the solution: How to choose dividend policy to grow the enterprise value reasonably. Finally proposes some concrete proposals to our public company’s dividend policy as the foundation of the above analysis.
