The Impact Of Controlling Shareholders’ Benifit Capture On Corporate Cash Dividend Distribution

Guiding and regulating listed companies to distribute cash dividends in accordance with actual operating conditions and improving the smoothness of dividend payments have been the focus of investors’ and regulators’ attention.Some listed companies in China have neglected investors’ rights and interests,and their willingness and low level of dividend payments have caused strong dissatisfaction among investors and been criticized by the China Securities Regulatory Commission(CSRC)and other stakeholders.Although the CSRC has promulgated a series of policies to encourage or compel companies to pay dividends,it is still difficult to restrain some companies from not distributing dividends for a long period of time.In addition,a large number of enterprises catering to the policy of paying only threshold dividends and micro-dividends have been generated.Only by uncovering the real root cause of non-distribution of dividends by listed enterprises and conducting an indepth study on dividend distribution,and effectively restraining the behavior of nondistribution of dividends at the source,can we promote the payment of cash dividends according to the actual operating conditions and improve the smoothness of dividends,which not only has a theoretical significance for the formulation of cash dividend policy,but also has This not only has certain theoretical significance for the formulation of cash dividend policy,but also has practical significance for protecting the rights and interests of small and medium-sized investors and promoting the high-quality development of the investment market.From the experience of western economies,cash dividend policy,as the most important financial decision of enterprises,is often subject to the arrangement of corporate governance structure.The governance structure of Chinese listed companies,however,has shown completely different characteristics from those of Western economies in the process of development,creating a Chinese style governance dilemma.On the one hand,the policy of restructuring and industrial restructuring of SOEs to ensure that some SOEs with severe losses can successfully raise capital has led many SOEs to form a pyramidal shareholding structure and internal capital market by divesting high quality assets to make them listed first and then feeding back to the parent company.In the early days of China’s capital market,the pyramidal equity structure and internal capital market played an important historical role in driving companies to achieve economies of scale and rapid expansion in the face of an immature external capital market.However,as the external capital market became more mature and effective,the negative effects of the pyramidal shareholding structure and the internal capital market began to emerge.Controlling shareholders are able to increase their control and hold on to the resources of lower tier companies through pyramidal shareholding structures,using cross-shareholdings and extended chains of control.Controlling shareholders are also able to use affiliate transactions to covertly transfer corporate resources and encroach on the interests of other shareholders through the internal capital market.On the other hand,with the rapid rise in the demand for resources for corporate development and the technical realization of full circulation of shares due to the reform of the share split,controlling shareholders gradually shift from a centralized to a decentralized corporate governance structure through the exchange of equity for resources,which leads to a growing competition for internal control and the intrusion of outsiders.In order to maintain control of the enterprise,the controlling shareholders conspire to control the voting rights of the shareholders’ meeting and implement decisions in their favor.Therefore,under the current corporate governance structure in China,controlling shareholders are able to capture corporate interests through various paths and channels,resulting in governance problems that are more likely to be manifested by controlling shareholders’ capture than by conflicts of interest between other shareholders and managers.The essence of the controlling shareholders’ capture behavior is that it is not separated from the basic category of interests.In order to satisfy their own interests,the controlling shareholder transforms the shared income that should belong to all owners of the enterprise into private income.In terms of the nature of cash dividend distribution,cash dividends are also theoretically one of the objectives of controlling shareholders as a shared income for all shareholders.Therefore,it is necessary to explore in depth the relationship between controlling shareholders’ self-interested opportunistic profit-grabbing behavior and corporate cash dividend distribution under the current corporate governance structure in China.This paper starts from the real situation of dividend distribution in China,combines the characteristics of Chinese corporate governance structure,and investigates the impact of controlling shareholders’ interest-grabbing behavior on corporate cash dividend distribution through theoretical analysis and empirical evidence:first,the formation mechanism and pattern evolution of controlling shareholders’ interest-grabbing behavior for cash dividends;second,the impact of controlling shareholders’ interest-grabbing through increasing control on corporate cash dividend distribution under the pyramid shareholding structure;third,the impact of controlling shareholders’ interest-grabbing through increasing control on corporate cash dividend distribution under the pyramid shareholding structure;and third,the impact of controlling shareholders’ interest-grabbing through increasing control on corporate cash dividend distribution.Third,under the decentralized governance structure,the impact of controlling shareholders’ benefit capture through collusion with other shareholders on the distribution of cash dividends;fourth,under the internal capital market,the impact of controlling shareholders’ benefit capture through structuring connected transactions on the distribution of cash dividends.The main findings of this paper are summarized as follows:First,by studying the paths of controlling shareholders to capture corporate cash dividends,it is found that regardless of the paths taken,controlling shareholders can always obtain benefits through the act of capture,and there are corresponding capture schemes when controlling shareholders capture benefits by different means.After the mathematical derivation of the ways of controlling shareholders’ profit-grabbing behavior through the idea of game,the optimal solutions of controlling shareholders through excess control,collusion and connected transactions are derived.Firstly,when the controlling shareholder implements the grabbing behavior by increasing the control,the optimal solution is to first grab the cash dividends of the enterprise and then keep part of the remaining profits for distribution as cash dividends,which aims to reduce the risk of being punished for the grabbing behavior.Second,when the controlling shareholder conspires with other major shareholders to carry out the acquisition,the optimal solution is to capture the cash dividends of the enterprise.The conspiracy to capture cash dividends requires the controlling shareholder to bribe other shareholders as allies through unilateral payments,and thus the capture does not have the risk of being penalized.Finally,when the controlling shareholder implements the capture by structuring the connected transaction,its optimal solution is to capture the cash dividend of the enterprise.Because of the information asymmetry and the natural concealment of connected transactions,the risk of being penalized for grabbing is low.Second,by studying how the controlling shareholder’s capture through excess control affects the distribution of corporate cash dividends,we find that:first,the controlling shareholder’s capture through excess control reduces the incentive to pay corporate cash dividends,but also promotes the level of corporate cash dividend payment.This indicates that the controlling shareholder captures the cash dividend through the excess control,and at the same time,distributes part of the cash dividend to reduce the risk of being punished for the capture;secondly,the executive compensation incentive and the executive promotion incentive aggravate the negative impact of the controlling shareholder’s capture through the excess control on the incentive to pay cash dividend,and promote the controlling shareholder’s capture through the excess control on the level of cash dividend payment.The positive impact of cash dividend payment level by controlling shareholders through excess control.Finally,in state-owned enterprises,larger enterprises and longer established enterprises,the phenomenon of cash dividend capture by controlling shareholders through excess control is more serious,which indicates to some extent that the opportunistic behavior of controlling shareholders is differentiated.phenomenon,which provides important experience and evidence for achieving the strategic goal of differentiated dividend regulation.Third,by examining how controlling shareholders’ capture of benefits through collusion with other major shareholders affects corporate cash dividend distribution,we find that,first,controlling shareholders’ capture behavior through collusion reduces the incentive and payment level of corporate cash dividends.This indicates that controlling shareholders conspire with other major shareholders to capture corporate cash dividends;second,sticky director compensation and external competitive pressure exacerbate the negative impact of controlling shareholders’ conspiracy to capture on corporate cash dividend payout incentives and payout levels.It shows that in the process of cash dividend capture by controlling shareholders through collusion,the support of the internal board of directors and the threat of external barbarians help controlling shareholders to implement the capture behavior from the side;finally,the phenomenon of cash dividend capture by controlling shareholders through collusion is more serious in the enterprises with two offices and a low proportion of independent directors,which indicates to a certain extent that the board of directors,as the core of the corporate governance structure,is important for suppressing The board of directors,as the core of corporate governance structure,has a key role in curbing the alliance voting system and shareholder collusion under the domination of controlling shareholders.Fourth,by examining how controlling shareholders’ capture of benefits through structured affiliated transactions affects corporate cash dividend distribution,we find that:first,controlling shareholders’ capture through structured affiliated transactions reduces corporate cash dividend payment incentives and payment levels.This indicates that controlling shareholders capture corporate cash dividends through structured connected transactions;second,the shareholding of external institutional investors and the quality of third-party audits mitigate the negative impact of controlling shareholders’ capture through structured connected transactions on corporate cash dividend payment incentives and payment levels,indicating that the introduction of more institutional investors and the commissioning of high-quality audits can effectively manage controlling shareholders’capture of corporate cash dividends through connected transactions from within.Finally,the phenomenon of cash dividend capture by controlling shareholders through structured connected transactions is more serious when the financial regulation in the region where the firm is incorporated is weak and the market is low,suggesting to a certain extent that the organic combination of a competent government and an effective market has a certain deterrent effect on regulating connected transactions and thus restraining the opportunistic behavior of controlling shareholders.Based on the research perspective of Chinese reality,this paper combines and innovates the application of existing research methods to explore and analyze the reasons why listed enterprises have been distributing dividends more sluggishly in a multi-dimensional manner and propose corresponding countermeasures.Compared with the existing research,this paper has three innovations.First,the innovation of research perspective.Based on the three characteristics of modern corporate governance structure,this paper finds that shareholders’ interest-grabbing behavior is an important reason for the decrease of cash dividend distribution,which provides a new perspective and explanation for the low willingness and low level of cash dividend distribution.Second,the innovation of research content.Based on the classical theory and the reality of China,this paper provides a new research content for understanding and grasping the problem of cash dividend distribution of enterprises by combining the principle of comprehensive system and focus,considering the characteristics of less distribution and less active distribution of cash dividends of Chinese enterprises,and starting from the way and path of controlling shareholders’ benefit extraction.Third is the innovation of research method.Based on the theoretical basis of previous studies,we construct the gain matrix and solve the equilibrium of controlling shareholders’benefit extraction through excess control,collusion with other major shareholders and construction of connected transactions through the idea of game,and find out the optimal decision of controlling shareholders’ benefit extraction through different ways for cash dividends.In addition,in the empirical study of shareholder collusion,the Shapley value based on the basis of shareholder collusion is constructed by using the principle of P-Power index in the cooperative game index,which provides a new approach to study the theory of shareholder collusion.