Factors influencing the stock dividend and transfer of reserve to common shares of listed companies

Based on the catering theory of dividends, this paper examines the effects of investor demand on the probability and proportion of the stock dividend and transfer of reserve to common shares of China´s listed companies. The results indicate that the investor demand for stock dividend and reserve transfer, which shows as dividend discount, is significantly negatively correlated with the probability of paying stock dividend and reserve transfer. Listed companies tend to not pay dividend in order to cater to the needs of investors. With regard to companies paying dividend, investors prefer to stocks with high proportion of stock dividend and reserve transfer. Investor demand is significantly positively correlated with the proportion of stock dividend and reserve transfer. In addition, earnings per share, reserve per share, retained earnings per share, corporate growth, proportion of circulation shares, as well as firm size and other factors also have some effects on stock dividend and reserve transfer of listed companies.