Research On The Relationship Between State Owned Capital Appreciation,Distribution Of Profits And Agency Cost

Market-oriented reform has been proceeded for 38 years since 1979,state-owned enterprises(SOEs)achieved rapid development in both size and capital strength.However,SOEs did not care for maintaining the investor's right adequately because of the absence of the owner.In order to maintaining the investor's right,SOEs began to turn over the profit based on the classification to government since 2007.But the distribution system still exists shortages,such as the low rate of actual payout and unreasonable classified standards,how to enhance distribution's efficiency and fairness by the reform of profits' distribution has become a research hotspot in scholarly community.This paper studies in three dimensions:the historical analysis of the distribution of SOEs' profits:1949-2015,the influence of the state-owned capital appreciation to the SOEs' agency cost,the relationship between the distribution of SOEs' profits and agency cost.The details mainly contain:Based on the analysis of historical institutionalism,this paper finds:financial revenue and expenditure,SOEs' operating performance and development plan and agency cost are the main influential factors to the reform of profits' distribution.As the endogenous factor to the the reform of profits' distribution,agency cost is most important when government formulates profits' distribution at this stage,and to reduce agency cost is the main reforming direction of profits' distribution.This paper chooses the listed SOEs in Shanghai and Shenzhen A shares as samples,does relation to analyse the influece of the appreciation of state-owned capital to the agency cost of SOEs' profits distribution between 2007 and 2015 through theoretical analysis and positivism model,and finds:since SOEs began to turn over the profit to government,the appreciation of state-owned capital inceased the agency cost of SOEs' profits distribution and the relationship's flexibility between government and SOEs.With the appreciation of state-owned capital,to lower the profits distribution's agency cost and rebuild fine relation between government and SOEs has become the main reforming direction of SOEs' profits distribution.Based on building empirical model,this paper exsamines the relationship between the SOEs free cash flow and agency cost,then carries on the empirical analysis on the relationship between SOEs dividend distribution and agency cost based on the three basic problems of distribution system which are implement cash dividend or not,the amount of cash dividend and equity dividend,finally further analysis the relationship between SOEs is to implement Management Stock Ownership(MSO)and agency cost,finds:1.the level of free cash flow is positive correlated to agency cost significantly,to reduce the free cash flow which management can manipulate is beneficial to reduce the agency cost of SOEs;2.SOEs implement cash dividend or equity dividend is beneficial to reduce agency cost,and to implement cash dividend and equity dividend together is also beneficial to reduce agency cost;3.to increase the amount of cash dividend is not beneficial to reduce SOEs agency cost;4.SOEs implement the management equity and the level of equity are both positive correlated to agency cost but the robustness is not enough,and the MSO in SOEs still needs to improve.This paper regresses separately by the groups of “central state-owned” and “local state-owned” and finds:1.the central state-owned enterprises implement cash dividend is not correlated to agency cost significantly,they implement cash dividend and equity dividend together is also not correlated to agency cost significantly;2.although SOEs increase agency cost by implementing MSO,but the correlation is significant in the group of “central state-owned” and is not significant in the group of “local state-owned”.This paper has two innovation points:1.based on the main line of the "principal-agent" relationship between government and SOEs,to summarize the historical law of SOEs profits distribution's evolution;2.based on the view of reform of SOEs profits' distribution,this paper analyses the relationship between state owned capital appreciation,the distribution of profits and angecy cost systematically since 2007,and compares the difference between "central state-owned" and "locol state-owned".Based on the study of the historical law of SOEs distribution system's evolution and the relation between State Owned Capital Appreciation,SOEs' profits distribution and agency cost,this paper provides the theoretical foundation and policy implications to the reform of SOEs profits' distribution at this stage.