This year, an increasing number of A-share listed companies have been rewarding investors through cash dividends and share buybacks, reflecting a growing awareness of shareholder returns. However, some firms still face issues such as mismatches between dividends and business performance or unclear buyback purposes.
For listed companies, shareholder returns should not merely focus on scale and frequency but also align with their development stage, balancing short-term rewards with long-term strategy to genuinely enhance corporate value. Here are three key areas for improvement:
**1. Establish a Dynamic Dividend Mechanism** Dividend policies should be tailored to financial capabilities, considering profitability and capital needs. Mature companies—such as those in banking or consumer staples with stable cash flows—can outline three-year dividend plans to set clear expectations and moderately increase payout ratios. Meanwhile, growth-oriented tech firms should avoid excessive dividends, reserving funds for R&D and innovation. Incorporating "dynamic balance clauses" in corporate charters to link dividends with R&D investments can safeguard basic shareholder returns while bolstering core competitiveness. Interim dividends can also shorten reward cycles and improve investor satisfaction.
**2. Improve Buyback Execution and Transparency** Supported by policies like relending for buybacks, companies have ramped up repurchases but must avoid token gestures. Buyback funds should prioritize core uses—either canceling shares to boost EPS or clearly allocating them to employee stock ownership plans to retain key talent. Detailed disclosures, including progress updates, price-range rationale, and disposal plans, are essential.
**3. Strengthen Expectation Management for Shareholder Returns** Stability and predictability are critical. Annual reports should transparently explain dividend policies, with thorough justifications for low or omitted payouts, eliminating erratic practices like "sudden dividends" or "abnormally high payouts." Proactive communication—via earnings calls or investor meetings—can clarify how return strategies align with long-term growth, particularly for emerging industries, fostering sustainable market expectations.
Shareholder returns reflect corporate governance quality. Only by designing reasonable, sustainable plans based on operational fundamentals, industry traits, and strategic goals can companies earn investor trust while driving high-quality growth.
Comments