Analysis of Dividend Decision-making Based on Capital Cost

In the case of agency theory and information asymmetry, cost of capital should be considered during the process of making dividend decisions. The concept of capital cost is formed under the cost of capital mechanism with specific conditions. The random quantity of dividend payment in Chinese listed companies shows, corporate managers are lack of concept of capital cost because of the absence of conditions required by capital cost mechanism. As a result, in order to standardize listed companies' dividend payment behavior, stakeholders should start with consummating the capital cost mechanism required conditions.