The modeling firm's value based on financial ratios, intellectual capital and dividend policy

Analysis of the Dividend Policy Decision-Making Mechanism of Chinese and Taiwanese Lithium Battery Industries

“…Business performance also reflects the financial situation of an enterprise. The better the mechanism of corporate governance is, the more inclined an enterprise will be to pay dividends [22,24]. Future operation plans, shareholder expectations, and the decision preferences of executives are certainly also emphasized by this research.…”

“…Plans of retaining earnings will affect a company's future development. It was also found that the risk preference of a decision-maker directly influences the formulation of the dividend policy [23,24]. The study of various dividend theories and the influencing factors of dividend policies deliberately involves the mechanisms and processes of decision-making by company executives [19,[22][23][24].…”

“…If a company has a larger scale and better fund dispatch ability, it will have a stronger ability to tolerate risks and is more likely to allot cash dividends; in other words, the larger the scale of an enterprise, the higher its ability to take risks [23,24]. The greater the impact on the cost of capital, the more likely an enterprise will be to pay higher cash dividends.…”

“…Based on the premise of the sustainable development of enterprises, when formulating a dividend policy, enterprises should not ignore retaining earnings of their own. The signaling explanation hypothesis mentioned that dividend information theory and confirmed that planning for retained earnings is related to a company's future development [24]. Overall, the retained earnings can be used in various ways; for example, not only for expanding the size of the business and repurchasing shares but also for investing in other enterprises [35].…”

“…Investors can understand the operation situation of business through an increase or decrease of dividend allotment. Corporate borrowing and dividend policy announcements imply a company's expectations of their future operational performance and convey inner information about the company [24,26]. The dividend allotment of a company releases a signal to investors, which can help to reduce information asymmetry between external investors and insiders [40,42].…”