The Impact Of Free Cash Flow On Cash Dividend Policy Analysis Of GEM Lists Companies In China

Once the concept of free cash flow is put forward and was in the financial sectorgenerally, enterprises can use free cash as dividends to shareholders. Free cash flowhypothesis think companies should use free cash flow, cash dividend to reduce managers beused to deal with the crisis of the cash flow, reduce the control of managers, reduce agencycost. Gem since founded in2009, its cash dividends of listed companies and the main boardlisted companies is very different than low cash dividend. Shortly after the listing of highproportion of the cash dividend distribution, some distribution amount was more than currentyear net profit, this phenomenon has attracted high attention of the market. Gem listedcompany high proportion of cash dividends is affected by the level of enterprise free cashflow, whether from the perspective of reducing agency costs of shareholders and managersconsider problem is worth discussing. So this article will combine the characteristics of thegem listed companies and the agency relationship to study the gem listed company’s free cashflow to the cash dividend policy influence, to understand the problem of agency for gem listedcompanies, to establish a reasonable corporate governance mechanism provides policySuggestions.Through theoretical analysis, this paper firstly introduces the connotation of the free cashflow and cash dividend policy theory, and then free cash flow of the gem listed companies toempirical analysis on the effect of cash dividend policy. In2010-2012, three years of the gemlisted companies as samples, choose cash dividend per share to be explained variables, theenterprise free cash flow, equity free cash flow and cash flows of activity as the explainedvariable, firm size and asset-liability ratio as control variables, three hypotheses is put forward,according to the assumption of variables to construct the model, using the software ofSPSS19.0analysis for descriptive statistics analysis, correlation analysis and regressionanalysis to verify the validity of the model and the correctness of assumptions.Through the empirical study found that the gem free cash flow is negatively related tothe cash dividends of listed companies. For the gem of the private family enterprisemanagement type, the agency problem between shareholders and managers is not serious. Soby issuing cash dividend reduces free cash flow and the management control of the phenomenon is not obvious. And equity scattered gem listed companies "weak shareholders,strong management" agency problem is serious. The gem should make reasonable cashdividend policy of listed companies, and improve the corporate governance mechanism, canmake the enterprise healthy and long-term development.