Ultimate Ownership Structure And Cash Dividend Policy

Dividend policy is the financial strategy for the listed company’s retained earnings distribution which relates to the choice of the financing policy and investment returns for shareholders and can affect the company’s stock market price and market image. So is an important measure for the performance and growth of corporation. Rational dividend policy transfers the effective information to the securities market, guiding the investors money flows and ensuring the effectiveness of the capital market. Therefore, dividend policy is the focus of the researches on the company’s financial for a long time. But Chinese present situation of complex agency problem because of special system background has provided a good material for cash dividend studies based on agency cost theory. At the same time the emergence of a large number of abnormal cash dividend policy has also made it become the focus of research in this area. Although the scholars have conducted extensive research and formed many achievements, they have not reached a consensus and new phenomenon appear constantly. Especially since the ultimate control concept is proposed, the research angle changes from the traditional ownership structure to the ultimate ownership structure, the relationship between the ultimate ownership structure and cash dividend policy has been the important studying content in this field. Reviewing related research, we can find hat the existing researches mainly focus on the ultimate ownership structure, which is the microscopic governance variables. The study considering both micro and macro variable’s mechanism remains to be further. Based on the current research status and practical needs, this paper chooses the relationship between the ultimate ownership structure and cash dividend policy as the research object, exploring the ultimate ownership structure’s impact on cash dividend policy and then revealing the key factors which affect the cash dividend policy of capital market in China. Through the study of this article, the agency cost theory of cash dividend has been further developed, which makes this paper has a higher theoretical value. At the same time, this article also has the three aspects practical value. Firstly, on the premise of knowing the ultimate ownership structure’s impact mechanism, we can design more reasonable ownership structure to guide the company’s cash dividend distribution to be more rational. This can not only embody the scientific effect of company governance mechanism of control right, and also reflect on the perfection of corporate governance mechanisms; Secondly, with the improvement of the governance mechanism of listed companies and the rationality of cash dividend distribution, the capital market can obtain more real and effective information and investors can make more reasonable investment decisions accordingly. It will promote the effective allocation of funds, so that to improve the overall effectiveness of capital market; Thirdly, this paper provides the strong evidence of policy implementation effect and it can be useful to find the problems existing in the policy and provide the evidence for the deviation happened. Then we can put forward the reasonable suggestions in order to promote the adjustment of macroeconomic policy formulation, implementation and feedback more scientific, and ensure to achieve the goals of macroeconomic regulation and control, to promote the healthy operation of macro economy.This paper chooses the ultimate ownership structure as the aspects to study the cash dividend puzzle of our country’s listed company in-depth and system. At the same time by introducing two key variables of macroeconomic environment, based on building a studying system this paper uses the normative research and empirical research way to do the literature review、theoretical model form and empirical analysis. This paper talks about the relationship between the ultimate ownership structure and cash dividend policy. And tests the relationship between the legal protection for investors and cash dividend policy. Also testing that whether the legal protection for investors affects the relationship between the ultimate ownership structure and cash dividend policy. At the same time analyzes that whether equity division reform plays the governance effect and weakens the ultimate ownership structure’s control ability for cash dividend policy. At last, this paper puts forward some related policy suggestions.Through the normative research for literature review、establishment for theoretical model and empirical analysis for theoretical assumptions, this paper finally forms important conclusions for the macro and micro aspects. The microaspect has formed the following four conclusions. The first, cash flow right has the relatively stable significant positive correlation with cash dividend paying will and level, which embodies the incentive mechanism of ownership right for cash dividend. The second, control right has the significant inverted U relationship with cash dividend paying will, but u-shaped relationship with the cash dividend paying level. This is the balanced outcome when the ultimate control person is in different levels of control right. The third, the separate degree has no significant correlationship with the cash dividend paying will and level. The state-owned properties of ultimate control person shows a preference for distributing cash dividends. In the decision-making of the cash dividend paying level, the state-owned properties of ultimate control person pay more attention to relative levels of cash dividend payment, rather than the absolute level. The forth, there is no significant negative relationship between cash dividend policy and other embezzlement, that is mean the cash dividend policy has no significant competitive relationship with other embezzlement, so cash dividend policy of listed companies is the mask for the ultimate control people to hide other benefit expropriation behaviors. The macroaspect has formed the following three conclusions. The first, the relationship between legal protection for investors and cash dividend policy in our country does not reflect the resulting model or alternative model. The institutes of legal protection for investors have been used by the ultimate control person to conceal their other benefit expropriation behavior. The second, the relationship between the legal protection for investors and cash dividend policy exits the significant regional differences. And also is the same for the effect of investor legal protection to the relationship between ultimate ownership structure and cash dividend policy. The third, equity division reform has changed the institutional environment of splited stock liquidity and fundamentally achieves the aim that with the same share should have the same right and price. But it does not change the final control people’s control over listed companies. After the equity division reform the two rights separation phenomenon is more significant and separating degree is higher. This makes the equity division reform does not substantially affect the relationship between the ultimate ownership structure and cash dividend policy, just changes the impact mechanism of the ultimate ownership structure on cash dividend policy. Although the equity division reform weakens the motivation of state-owned properties on cash dividend preference to a certain extent, but after the reform the cash dividend policy is still the balanced outcome for the ultimate control people between different interests gotten ways. The only change is the benefit access way and the costs.