The Impact of Differentiated Dividend Tax Reduction on Cash Dividend Policies of Listed Companies

In the Chinese capital market, the low cash dividend payout rate and low dividend stability of listed companies have been widely criticized by investors. Therefore, China’s regulatory authorities have successively issued a series of policies aiming at regulating and guiding listed companies to conduct scientific and reasonable dividend distribution, one of which is the Differentiated Dividend Tax Reduction Reform in 2015. This thesis aims to study its impact on the dividend payment level and dividend stability of listed companies, and explore its effectiveness in safeguarding investor interests. The empirical results show that after the differentiated dividend tax reduction, compared to companies with lower shareholding ratio of natural major shareholders, companies with higher shareholding ratio of natural major shareholders significantly improved the dividend payment level and dividend stability. Further research has found that there are differences in the impact of Differentiated Dividend Tax Reduction Reform on cash dividend policies between state-owned and non-state-owned companies. This thesis provides a theoretical basis for further deepening dividend tax reform in China and has important practical guidance significance for regulatory authorities to improve dividend regulatory policies.