An Empirical Study On The Relationship Between Cash Dividend And Inefficient Investment

The investment decisions of listed companies in the core position of its three biggest important financial decisions, investment efficiency directly affects the growth of the company, which constitutes the microeconomic foundation of macroeconomic growth further. Inefficient investment behavior damages the interests of the shareholders and the healthy development of the macroeconomic seriously, which is always the important content in the modern company finance research field. Scholars have been analyzed the causes of inefficient investment from different angles and puts forward a method to restrain the efficiency investment. This paper draw lessons and developed the theory of cash dividends, in the framework of principal-agent theory and information asymmetry theory, discusses the efficiency of cash dividend management about company investment mechanism, using the data of listed companies in China empirically the relationship between cash dividend and the efficiency of investment firms, in order to provides a new path for controlling the efficiency investment behaviorThis paper is first to review the investment theory and cash dividend theory carding and related literature, and subsequent theoretical analysis and empirical research is on this basis. On the basis of relevant research, using the modified Richardson model, with China’s A-share listed companies from2009to2011samples of the3years about3633observations total, this paper calculated the index of the investment efficiency of listed companies in our country. Then this paper through the analysis of the empirical results in combination with relevant theory of cash dividend effect caused by free cash flow, and analyzes the problems and the insufficiency existing in the cash dividend policy in our country securities market, and then give some suggestions to solve these problems, hoping to improve the investment efficiency of listed companies in China through the continuous improvement of the cash dividend policy.Through the empirical analysis of this paper, the main conclusions of this paper has the following several aspects:1. The free cash flow and over-investment have positive correlation, and excessive investment behaviors are more likely to happen in positive free cash flow of the company.2. The free cash flow and under-investment have negative correlation, and inadequate investment behaviors are more likely to happen in negative free cash flow of the company.3, Cash dividend can inhibit excessive investment caused by free cash flow.4, Past continuous distributed cash dividends or the more cumulative to distributed cash dividends inhibit negative free cash flow leads to underinvestment.