| Dividend policy is one of the three essential financial decisions during listed company's operation activities.It is not only the distribution policy following investment decision and financing decision but also has long-term effects on reinvestment and financing activities of the company.All the time,dividend policy,financing policy and investment policy are important parts of academic researches.Compared with developed Western companies,China's capital market has a lagging development and incomplete investor protection laws.There are many interest conflicts between large shareholders and minority shareholders,which leads to severe agency problem.With the control of the company,large shareholders expropriate benefit through related transaction,collateral loan or over-investment.As a substitute governance mechanism,cash dividend can restrict the expropriation from large shareholders.However,since China's capital market is different from Western countries,listed companies have little willing to distribute incomes.Dividend policies of China's listed companies are discontinuous and even catering for related regulations.Under thebackground mentioned above,investigating the effects from agency problem on company's dividend policy and investment and financing policy will have a great significance for restricting agency problem of large shareholders,completing related regulations and deepening the reform of China's capital market.For a long time,there are abundant academic researches about company's dividend policy,financing policy and investment policy which agree that there are linkage relationships among the three financial decisions.Most parts of the researches are focus on the agency problem between managers and shareholders.However,scholars gradually find that concentrated ownership is worldwide common,which indicates that agency problem between large shareholders and minority shareholders has important influence on firm's financial decision.Weather cash dividend is a substitution or consequence of company's governance remains a question.Although scholars have done some researches about the relation between dividend policy and firm's investing and financing activities,they ignore the difference among different growth stage and the dynamic process of leverage adjustment.This paper reviews the relevant theories and literatures of the existing dividend policy and the agent cost of the controlling shareholder and analyzes the evolution history of dividend policy in China.Following the reviews and analysis above,this paper,based on agency problem of shareholders,investigates the dividend decisions and their values of China's listed companies and the influences of different dividend policies on investment decision and dynamic adjustment of capital structure.Firstly,this research,based on substitution model and consequence model,investigates the impacts of shareholding ratio of controlling shareholder on both company's dividend decision and its effects on firm value.Secondly,focused on the issue of how dividend policy affects the company's investment efficiency,and introduced enterprise life cycle theory,we find out an opposite relationship between the cash dividend payout rate and the maturity of the company,which indicates a life-cycle characteristics of corporates'dividend policy.Thirdly,this paper discusses the impact of dividend policy of listed companies on financing decision-making,and studies the impact of cash dividend on capital structure adjustment rate by studying the ownership concentration of different controlling shareholders.In the empirical research,we adopt Shanghai and Shenzhen A-share market public companies from 2006 to 2015 as research samples.The main conclusions are as follows:Firstly,the expropriation is more obvious in companies with lower controlling shareholding ratios.Because of severer agency conflicts,these companies will distribute higher cash dividend.There is a positive relationship between payout ratio and controlling shareholding ratio.Besides,our research shows that values of cash dividend are larger in the companies with higher controlling shareholding ratios,which supports the findings above.In all,our empirical results provide evidence for substitution model.Secondly,the empirical research adopts retained profits equity ratio as the proxy variable describing firm's life-cycle and examines the dividend life cycle theory by using statistics of listed companies in China.We find that the investment will be more efficient when company makes dividend policy according to its life-cycle.Developing firms should not distribute cash dividend to avoid under-investment while matured firms should rise the payout ratio to avoid over-investment.Thirdly,to analyze the impacts of cash dividend on adjustment speed of capital market,we adopt shareholding ratio of largest shareholder into the empirical study.Since agency cost of controlling shareholder is the main factor that effect the dynamic adjustment of leverage,cash dividend may lead to a more convenient channel for controlling shareholders to expropriate benefits,which will decrease the adjustment speed of capital structure.However,since financing cost is the main factor that effect the dynamic adjustment of leverage,cash dividend may decrease the equity cost,which indicates a higher speed of dynamic adjustment of capital structure.In general,this paper researches the dividend policy of the listed companies under the control of the dominant stockholder,distinguishes the intrinsic necessity of the differentiated dividend policies of listed companies during different developing stage and ownership concentration,and discovers the regulation mechanism of differentiated dividend policy to the company's investment efficiency and capital structure adjustment in the case of the existence of controlling shareholder's agency cost.With the promotion of China's capital market to continue to grow and develop,controlling shareholder abused of company agent advantage could be effectively monitored and prevented while the interests of small shareholders and investors could be protected.China's government regulators need to establish capital market supervision system of laws and regulations with both consideration of company development needs and protection of capital market investors,interests. |
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