Determinants of corporate dividend decision in China: An application of the panel data model

Abstract

Dividend decisions have been a contentious issue between company managers and shareholders. In this study, the author attempts to identify the determinants of dividend policy for Chinese financial industry companies. From 2014 to 2018, the panel data of 61 companies were analyzed using fixed and random effects technology. The results show that the company's profitability scale and risk are significant determinants affecting the dividend policy of Chinese financial companies. ROA and EPS in profitability are negatively correlated with dividend decisions. This is an unexpected result. The correlation between several other agency variables and dividend decisions is supported by agency cost theory.