| Dividend is considered as an important way to repay shareholders and cultivate investment belief and is also an important tool to maintain the stability of capital market,especially in China,in which capital market is not mature enough and the relevant laws are not perfect.However,there is a common phenomenon of few payer and low dividend payment rate in China’s listed companies,which is called a long unsolved "Dividend Puzzle".In recent years,the media’s hot discussion about the "stingy" have attracted the attention of regulators.Since 2001,in order to protect the interests of investors and to improve the dividend problems of listed companies,the SEC has successively issued four semi-strong dividend policies,which linked dividends to refinancing.However,these policies produced little effect.Therefore,it is still a long way to continue to explore the cause of the"Dividends Puzzle".The current literature analysing influencing factors of dividend has transformed their concentration from internal characteristics to external environment.However,the external factors mainly concentrate on macro economy,law,industry competition,regional factors,media,institutional investors and other aspects,ignoring the influence of the most important non-financial stakeholders of the product market--the major customers on the dividend policy.As an important component of the business strategy on the product market,the major customers would inevitably affect the company’s business activities,and further affect the company’s financial decisions.The literature of stakeholder theory and customer shows that the customer has two opposite effects--risk effect and income effect at the same time.On the one hand,when the overall effect embodies as the risk effect,the company’s heterogeneous risk will rise,which increase the probability of the company falling into financial distress,beside,the risk expectation of external investors and management will also rise.In order to cope with uncertainty,management needs to keep more cash,which therefore will reduce dividend payment.The company chose to reduce the dividend,mainly because the listed companies in our country generally faced with funds ischemia.Besides,the information asymmetry and agency problems on the capital market make the companies tend to depend more on internal financing;and reducing the dividend is usually considered to be a kind of internal financing with relatively low cost,especially under the circumstance that the dividend policy of listed companies is unstable in the emerging capital market of China.What is more,compared with the rigid expenditure such as employee salary,the dividend payment has greater flexibility.At the same time,considering the relative "Stickiness" of dividend payment policy,the management generally avoids paying high dividends when they do not have sufficient confidence to maintain a high level.Therefore,when the risk effect is dominant,ceteris paribus,the company should reduce the dividend to copel with the uncertainty.On the other hand,the overall effect may embodies as the income effect,mainly because good customer relationships are not only able to realize information sharing in the supply chain,improve the product,enhance the market competitiveness of product,but also benefit to the working-out of accurate production plan,reduce the inventory backlog and impairment losses,increase inventory turnover rate,improve business performance,increase profitability,stabilize sale revenue and operating cash flow,reduce operating risk.Dividend is the distribution of profits and is unavoidably affected by the state of operation of the company,ceteris paribus,the company may increase the willingness and level of dividend payment.Therefore,whether the customer concentration has an impact on dividend policy is an open empirical problem.Based on the relevant theories and literatures,this paper focuses on the following questions:(1)Does customer concentration affect the company’s willingness and level of the dividend payment?Which is the dominant factor between risk effect and income effect?(2)What is the moderating mechanism that customer concentration affecting dividend payment?Combined with customer relationship,it examines in which sub-samples the relationship between customer concentration and dividend payment are more significant.(3)If customer concentration is significant negatively related to dividend payment,does customer concentration indeed increase company’s operatingl risk,which results in the lower dividend payment?Does company with higher customer concentration really hold more cash to precaution against the additional operating risk induced by higher customer concentration?Would the capital market be conscious of the risk effect of customer concentration?In order to solve the above problems,the empirical content mainly includes three sections.Specifically:The third chapter examines whether customer concentration affects dividend payment.Basing on A shares of listed companies from 2007 to 2016 in Shanghai and Shenzhen stock exchange and taking the sum of first five customers’ sales ratio,the first big customer sale ratio and the first five customers Herfindahl-Hirschman Index as the explanatory variables,to examine whether customer concentration affect company’s willingness and level to pay dividend?The study finds that the overall effect of the customer concentration is risk effect and the customer concentration is negatively related to the willingness and level of the dividend payment.Further analyses indicate that customer concentration can also explain the dynamic adjustment of dividend payment,dividend smoothing and low dividend behavior.Specifically,there is a significant positive correlation between customer concentration and the probability of dividend omission(payment in prior period but non-payment in this period),but a significant negative correlation with the probability of declaration of dividend(non-payment in prior period but payment in current period).Customer concentration not only has a negative impact on the dividend smoothing,but also has some explanatory power on the low Cash dividend phenomenon.The fourth chapter examines the moderating mechanism of customer concentration affecting dividend payment.Based on the third chapter,we further study which factor influence the negative relationship between customer concentration and dividend payment.From the point of customer relationship,it checks whether the negative significance is different in different relationship sub-sample.The research shows that when customer relationship is better,it can alleviate the negative relationship between customer concentration and dividend payment,and the negative relationship is more significant when customer relationship is worse.Further combined with the firm characteristics,it explores whether the negative relationship between customer concentration and dividend payment is different in the cross sample of customer relationship and corporate characteristics?The result shows the negative relationship between customer concentration and dividend payment is more significant in cross-sample of worse relationship and smaller size(lower profitability,lower industry competition),which indicate that worse relationship and firm size,profitability and industry competition have a consistent negative influence on the relationship between customer concentration and dividend payment,consistent with expectations.The fifth chapter further explores whether the dividend payment has been affected by customer concentration through operating risk.This chapter attempts to improve the logic in the third chapter,testing whether it is the risk effect of customer concentration that make the company to decrease the dividend payment,and further analyzing whether the management really increased cash holdings to prevent customer heterogeneity risk,and whether investors perceive customer concentration as the risk with the help of market reaction to dividend cut event.The study finds that customer concentration not only increase the future two years’ business risks,but also increase the current operating risk,besides,customer concentration really reduced dividend payment through this uncertainty The business risk has mediating effect in the negative relationship between customer concentration and dividend payment.Further analysis also suggests that dependent company does hold more cash.Furthermore,when the company cut its dividend,customer concentration and cumulative abnormal return is significantly negatively correlated,indicating investors will give company with more customer concentration base a lower price.This chapter further validates the logic of this paper from company level and market level,supporting the research conclusion of the third chapter.The contribution of this study is mainly reflected in the following three aspects:First,the existing literature mainly discusses the influencing factors of the dividend payment from the company’s internal characteristics and external environment,while the external factors are mainly concentrated on the macro economy,law,industry competition,regional factors,media,institutional investors and other aspects,ignoring the influence of the most important non-financial stakeholders of the product market--the major customers on the dividend policy.This paper expanded the research of the influencing factors of dividend payment in China and enriched the relevant literature.Second,most of the existing customer’s literatures are based on American listed companies,while the research focus on the domestic companies is much less,especially the topics on the influence of customers on dividends.Based on the data of Chinese listed company data,this paper not only discusses whether customer concentration could affect the behavior of dividend payment,but also progressively explores which factors influenced the degree of negative relationship between them.From the point of customer relationship,it checks whether the negative significance is different in different relationship sub-sample,which complements the existing literature.Third,it discusses whether the customer concentration increases the risk of the company and further affects the dividend payment,exploring the intermediary path of customer concentration affecting the dividend payment from current and future risk two aspects.Furthermore,it supports the customer concentration risk effect from the firm-level business risk and the market reaction to dividend cut event,not only enriching the customer literatures,but also linking customer with the reaction of capital market through the event of dividends cut,which also enriched the literature of capital market. |
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