Relationship Research On The Heterogeneity Of Institution Investors And Cash Dividend

With the rapid development of China’s securities market, the multi-dimensional pattern of institutional investors has been formed, including Securities Investment Fund, which is the main part of institutional investors, the Insurance Fund, the Social Security Fund, QFII and so on. Split share reform will change the equity structure of China listed companies fundamentally, improving the shareholding ratio of institutional investors. The level of corporate governance can be able to improve since institutional investors would play a more important part in management supervision.This paper selects the data of the A-share listed companies except financial and insurance stock from2006to2010and analyzes the relationship between different kinds of institutional investors and cash dividend policy. Considering the influence of financial crisis, two samples are used in testing the share holding preference of institutional investors and their ability in corporate governance.The results are as following:Institutional investors take part in the corporate governance, affecting the cash dividend policy. But this relationship is influenced by the heterogeneity of Institutional investors and periods. In terms of the probability of cash dividend payment, Securities Investment Fund affects it positively during the whole period. This relationship can be found in QFⅡ shareholding before financial crisis and Social Security fund shareholding after financial crisis. In terms of the level of cash dividend payment, the more Securities Investment Fund hold shares, the more dividends are issued.Institutional investors in China have more preference to the companies that pay more cash dividend. Before financial crisis, only Securities Investment Fund and Social Security Fund consider cash dividend when choosing shares. After2008, four main kinds of Institutional investors are correlated with dividend payment positively and significantly. The reason might be that investors pay more attention to cash dividend than the capital gain owing to the difficulty in obtaining profit in stock market after financial crisis.