Why do some listed companies make profits but are stingy with dividends? More than 800 words

Abstract: This paper introduces the situation and characteristics of dividends of listed companies in China, and deeply analyzes the reasons why some listed companies are stingy with dividends from internal characteristics, imperfect system and lack of supervision, which provides a thinking angle for investors to rationally treat dividends in China stock market. On this basis, this paper puts forward some policy suggestions to promote high-quality dividends of listed companies in China. Keywords: listed companies; Dividend policy; Reason 1. The present situation and characteristics of dividends of listed companies in China. Dividends are dividends paid to investors by joint-stock companies every year according to a certain proportion of their share in profits. Investors buy shares of a listed company, invest in the company, and enjoy the dividend rights of the company. Generally speaking, there are two forms of dividends of listed companies: cash dividends and stock dividends. Cash dividend is a dividend paid in cash. Most foreign listed companies choose cash dividend as the way of profit distribution, and in order to maintain control and maintain the steady growth of earnings per share, they implement this method steadily and continuously. With the publication of the annual reports of 20 10 listed companies in Shanghai and Shenzhen stock markets, the issue of stock dividends has become an annual hot spot. However, in the face of the increase in profits, some companies have seen the phenomenon that "executives get high salaries and shareholders get low dividends". Generally speaking, dividends of listed companies in China have the following characteristics: 1. The phenomenon of non-dividend is common in listed companies in China, and the dividend payment rate is low. Many listed companies with dividend-paying ability evade dividend-paying responsibility in the name of enterprise R&D or expanded reproduction. As of 20 1 1, 2 1, 65438,19, of the 657 listed companies that have published their annual reports, more than half have been "penniless" in the past three years. On August 3, 20 10, 1898 listed companies, 6 18 listed companies did not pay dividends for three consecutive years, and one of them did not pay dividends every year. According to the dividend data of American Standard & Poor's Index, Financial Times Index, Nikkei Index, TAIEX Index of Taiwan Province Province of China and Hang Seng Index of China and Hong Kong in 2005, the dividend proportions of the United States, Britain, Japan, Taiwan Province Province of China and Hong Kong of China are 34.36%, 42.6 1%, 50.68%, 72.04% and 42.5 respectively. 2. The listed companies with cash dividends are higher than before, but the dividend yield is very low. Before 1995, the cash dividend ratio of listed companies in China was relatively high, accounting for more than 50% of all listed companies; From 1996 to 1999, the proportion of companies paying cash dividends decreased significantly, only about 30%; After 2000, it was basically stable between 50% and 60%. In terms of dividend yield, according to the statistics of Dow Jones Company on 32 major countries and regions in the world, the average dividend yield of each market is 2.205%, and the dividend yield of most markets is more than 2%. In 2008 and 2009, the average dividend yield of domestic dividend-paying companies was 1.03% and 1.0 1%, respectively, which was more than 50% lower than that of one-year time deposits at the end of that year. The average dividend yield of 20 10 listed companies is 0.89%, which is much lower than the one-year fixed deposit of 3. Second, the analysis of the reasons why listed companies in China make profits but don't pay dividends. Sustained cash dividend is the main symbol of the steady development of listed companies, which is of great significance for cultivating the long-term investment concept of the capital market and enhancing its attraction and source power. In the mature securities market, the annual dividend income of investors is higher than the interest of bank deposits most of the time. Stock investment is regarded by investors as a sound investment method. The main purpose of investors entering the stock market is to pay dividends, and the second is to share the fruits of economic growth through the rise of stock prices. Since dividend income is an integral part of investors' daily investment income, investors are very sensitive to whether listed companies pay dividends or not. Dividend distribution has also become a powerful lever to attract investors to choose stocks, encourage long-term investment and help avoid stock market ups and downs. The reason why China stock market is accused of embezzling money is that listed companies take more and give less. Statistics show that,

From 1990 to 20 10, the total amount of A-share financing is 2.27 times of the total amount of dividends. It is difficult for listed companies to share the fruits of economic growth and increase their property income by dividend returns, so they can only switch from long-term investment to short-term speculation, and obtain the price difference income through "high throwing and low sucking", which also encourages the abnormal value orientation of "emphasizing speculation and neglecting investment" in the securities market. In a year of normal economic conditions, if a listed company with stable operation is profitable and has abundant cash flow, it should repay investors in the form of cash dividends. So what are the reasons why some listed companies in China refuse to pay dividends to investors even if they are profitable? I think it can be divided into two categories: internal cause and external cause:

(1) From the inside of the enterprise, there are mainly the following three aspects: 1. In that year, the profit was positive, but the company's undistributed profit, that is, the accumulated profit, was still negative, and the company's losses had not been made up, so it was impossible to pay dividends. This situation is more common. There are many risk factors in enterprise management. This year is profitable, but it may lose money in previous years. Listed companies must meet the following three conditions when distributing cash with profits of the current year: (1) The company has profits of the current year; (2) Deferred losses have been made up and carried forward; (3) Withdraw statutory common reserve fund 10% and statutory public welfare fund 5%- 10%. Therefore, it is reasonable for listed companies that do not meet the above three conditions not to pay dividends to shareholders in that year. 2. The top management of the company is too selfish and makes abnormal adjustments to the financial statements, thus turning the original profits into losses and avoiding dividends. The management of an enterprise is very familiar with the operation and financial situation of the enterprise, but in the case of weak supervision and "absence of owners" of state-owned listed companies, the management may take advantage of this information asymmetry to seek benefits. A typical operation action is that the management may make a loss on the company's profits, make the net assets small, and then achieve the purpose of acquisition at a fairly low price; Or expand the book losses of listed companies by adjusting and hiding profits, and then use the book losses to force local governments to transfer shares to companies with senior executives holding shares at low prices. If the local government does not agree, it will continue to manipulate profits to expand book losses until the listed company is specially treated and then acquired at a low price. 3. Listed companies are unaware of dividends. China's capital market has developed for 20 years, and the development of many listed companies is on the rise. There is a big gap between China and western mature enterprises in capital, technology, talents, aquatic product management and development concept. Many domestic companies tend to be conservative when making decisions, and pay more attention to accumulating strength to make enterprises grow up first, rather than giving priority to dividends to shareholders. Many companies have made it clear that due to the increasing demand for funds in the future, in order to ensure the long-term development of the company, dividends will not be paid. Due to the lack of dividend awareness, in the case of surplus, many companies give priority to the salary increase of the company's management to motivate the management team. It is not surprising why there is a phenomenon that "executives get high salaries and shareholders get low dividends".

(2) External reasons mainly include institutions, government agencies and investors. 1. China's cash dividend system has "three shortcomings", that is, it lacks universal binding force, integrity and supporting punishment measures. Although the new cash dividend regulation increases the profit distribution ratio from 20% to 30% and cancels the distribution method of stock issuance, the regulation is limited to listed companies that need refinancing. For those listed companies that have no refinancing plan, the new regulation does not involve dividends, dividends and dividend time. Therefore, the new cash dividend regulations still cannot fundamentally solve the current situation that listed companies in China are unwilling to pay dividends. The new regulation is to take 30% of the annual distributable profit in the last three years as the threshold for refinancing. Therefore, listed companies can completely adopt the method of surprise dividend to realize refinancing, which will lack "fairness" to investors in different periods and easily lead to insider trading. The new regulations are not clear about the penalties for listed companies violating these regulations, and there are no provisions on how to punish listed companies once they violate these regulations. If the key problem is non-compliance, listed companies can't achieve their refinancing plan at most without other influences, which will make listed companies have no fear of not paying dividends according to regulations. 2. The responsibility of the government supervision department has not been put in place, resulting in irregular information disclosure. Judging from the current listed companies, there are great problems in information disclosure. Because the government regulatory agencies did not do a good job in supervision, many things directly related to this transaction, including transaction price, pricing basis, commitments of shareholders and government, transaction terms, auxiliary transactions, etc., were not disclosed. Including the disclosure of the source of funds and repayment methods. The source of funds determines the financial pressure of management in the next few years and directly affects the management's decision-making on listed companies. At present, most of them are disclosed as their own funds, and no one discloses the financing and lending relationship at the next level. All these will lead to the loss of true reliability of financial statements, and listed companies make a decision not to pay dividends by taking advantage of asymmetric information. 3. Speculation is common among investors, who do not have the mentality of holding stocks for long-term value investment. Many investors just wait for the opportunity to earn the difference, and pay insufficient attention to dividends in psychological expectation, which is also an important reason for the continued low dividend rate in China stock market.

Three. Policy Suggestions Based on the above analysis of the reasons why listed companies in China are stingy with pink, the author thinks that the present situation can be improved from the following aspects: 1. Introduce advanced corporate management and development concepts, enhance managers' dividend awareness, promote the benign development of the capital market, and then provide a broad space for the company's financing and refinancing. 2. Improve the company's cash dividend system. Make clear provisions on the proportion, amount and duration of dividends; Restrict the behavior of surprise dividends; Formulate practical punishment measures for enterprises that do not pay dividends according to regulations, so as to urge listed companies to voluntarily pay dividends. 3. Improve the information disclosure system of listed companies, strengthen the supervision of listed companies by government supervision departments, and avoid dividend evasion caused by information asymmetry. Four. Conclusion As mentioned above, it is not difficult for us to see that there are so many "iron cocks" in China stock market, which is the result of comprehensive factors such as the financial management system of listed companies is not sound according to law, a good supervision system has not been formed, and investors' awareness of value investment is weak. Only with the concerted efforts of the three parties, Qi Xin can we truly open a beautiful era of high-quality dividends for listed companies in China.