Analysis Of The Impact Of Bank Loans On Cash Dividend Policy

Conclusions in the western capital market point out that dividend policy can effectively solve the agency problem of different interests subjects in the company. However, in the domestic market, cash dividend has caused large shareholders grabbing the interests of minority ones, although it can be used as a relief of interest conflicts between shareholders and managers. This paper analyses the effect of debt financing on corporate governance from the perspective of agency problem, and concludes that when dividend policy can’t solve agency problem, companies should exert the effect of debt financing to protect the interests of minority shareholders. Therefore, based on the reality that the bank loan is an important way of debt financing, we focus on the question how bank lending activity impacts dividend policy of domestic listed corporations.Using the data of non-finance listed corporations of Shanghai and Shenzhen’s A share markets from 2008 to 2013, we analyse the impact of bank loans on dividend policy, and discuss short-term and long-term bank loans according to different maturity structure. Based on the definition of dividend policy in this paper, the dividend distribution level and incline are both considered. We use descriptive statistics method, independent sample T test and other methods to analyse initially, then use multiple linear regression and logistic regression for empirical test, and finally propose relevant recommendations.Empirical results show a significant negative relation between a corporation’s dividend policy and bank lending intensity, that is, the more intensive the banking relationship, the lower the dividend distribution level and incline, and different maturity structure of bank loans also shows a significant negative relation with dividend policy. Therefore, bank loans can play an effective role of corporate governance from the aspect of affecting dividend policy. In addition, dividend policy is also affected by other variables that a larger corporation with stronger profitability and more concentrated ownership structure tends to have higher dividend payouts, while the growth ability and debt level have the inverse effects. In view of this, we can also get some enlightenments.