The Analysis On Dividend Policy Of Private Listed Companies On Agency Theory

This paper tries to explain present dividend policy of Chinese private listed companies using agency theory. And it investigates the relationship between agency problem and dividend policy in Chinese private listed companies both theoretically and empirically. In respect of theory, from two aspects, obligee vs. shareholder and shareholder vs. manager, we analyze agency conflict in listed company and how it influences the company's dividend policy. However, we can't copy the developed countries' agency theory because of the fundamental conditions of the theory are not exist in China. In the developed countries such as USA and UK, steady dividend policy is used to control agency cost. On the contrary, the dividend policy of private listed companies is just the result of serious unresolved agency problems. This can be shown by tunneling effect of cash dividend that arises from the agency conflict of controlling shareholder and small shareholders. In terms of empirical research, based on theory analysis and actualities analysis, we construct empirical models to explore the dividend policy of private listed companies from several angles of agency problem. With data from China's securities exchanges from 2002 to 2004, we get the following empirical results. Firstly, serious agency conflict do exists, and using control right that can not be shared by small and medium shareholders, controlling shareholder maybe enlist self-interests at the sacrifice of small and medium shareholders' interests. Secondly, other large shareholders inclined to adhere to controlling shareholder or associated with controlling shareholder in company dividend policy. Thirdly, managers are consistent with controlling shareholder in company dividend policy, but their power is not too strong. Fourthly, high-risk capital structure can restrict private listed companies to distribute high cash dividends.