Review of Research of the Catering Theory Influence on the Capital Market

Dividend policy is one of three key problems in the corporate finance field. Recently, the new behavior finance thought gradually started to influence on the dividend policy studies. Baker and Wurgler (2004) proposed "the Catering Theory" which provided a new perspective to meet the "disappearing dividends" phenomenon and at the same time became the focus of academic research of the financial experts. In China, there are increasingly attentions on the research which put the theory into our capital market considering the Chinese actual situation by Chinese scholars. This paper systematically expounds the Catering Theory and the related literature theory, especially the recent domestic development in this rising area and also analyses the prospect. All these work is in the hope of providing reference on the dividend policy research in our capital market.