Pyramid Shareholding Schemes, Ownership Control And The Cash Dividend Policy Of Public Company

The formation of dividend policy comes from the race of interests, thus stakeholders will limit the influence of managers and controlling shareholders to dividend policy as far as possible. Capital market in our country generally exist the phenomenon of low cash dividends distribution and fluctuation, and as the main maker of company policies.controlling shareholders play a vital role on the company’s dividends distribution. Therefore, through studying the cash dividend policy of listed company to study the influence of controlling shareholder and investor protection has always been a hotspot.Foreign study has found that the main problems in the corporate governance is no longer the Berle and Means conflicts between shareholders and managers, but the conflict of interest between outside investors and shareholders in the trend of ownership concentration. And studies have found that this kind of conflicts of interest will be reflected in the company’s cash dividend policy, characterized by-low, malignant dividend policy. Therefore, many research are related to the relationship between dividend policy and the ownership structure. Meanwhile foreign researchers LLSV (1999) has researched on pyramid shareholding structure and the ultimate controller pushing the study of dividend policy to another stage, namely the impact of ultimate controllers on the dividend policy. Ultimate controllers through layer upon layer control chains eventually affect the company’s policy, which makes their impact on the dividend policy is relatively more hidden. This article embarks from the domestic and foreign existence widespread pyramid shareholding structure, and combined with China’s unique social background of the capital market, to study the possible impact of ultimate controller on the dividend policy and ownership control on tunneling remission.This paper helps confirming the relationship between the ultimate controller and the cash dividend policy, which includes both the ultimate controller’s control and cash flow rights separation degree impact on cash dividend policy, and also includes the influence of the nature of ultimate controller. The effects of the two parts of the ultimate controller from the perspective of private benefits of control and conform to the self-interest to make dividend policy. And it will have conflict with outside investors and expropriation behavior. Some of the domestic and foreign scholars study suggests that control man’s behavior can be limited by ownership control, thus help to enhance the value of the company. But whether this effect can play a role on the cash dividends of listed companies has not been studied. This article has carried on the empirical research for ownership control and its influence on the two rights separation of ultimate controller to further promote the research process. It’s also useful to perfect the governance mechanism of listed companies, and to protect the interests of investors, and to the promotion of China’s capital market system. Therefore, it both has academic value and practical significance.This paper firstly combed the related theory about corporate governance and dividend policy at home and abroad, and defined the basic concepts and theories, such as ultimate controller, dividend policy related. Then the dividend policy of listed companies in our country as well as the related of the pyramid shareholding structure is analyzed. For the empirical part, this research adopted the Shanghai and Shenzhen two city a-share listed companies for three consecutive years in 2012-2014 as panel data, and use the regression analysis to conducted the two-stage regression model. And then use the Logit regression model to analyze the dividend payment tendency and payments tend to be lower; and our country listed company’s ownership balance can’t play the role on relief the benefit expropriation of ultimate controller.At the same time, the article also make a robustness test about the ownership balance according to the control group. According to the research conclusion of this article, therefore, the author thinks that promoting the dividend policy of listed companies in our country return to rational, stable, just from the perspective of the ownership structure is not enough, it also should be more considering the relevant improvements such as law and system to restrict controlling shareholders’behavior. Finally, this paper gives some suggestions on investor protection, and corresponding regulations of our country capital market.The innovation in this paper inspects the impact of ownership control on the ultimate controller’s two rights separation.The highly two rights separation degree of ultimate controller can bring the problem of benefit expropriation, and whether ownership control can be used as an effective equity structure of reducing the expropriation should remain to be considered. Previous scholars has not before involved in such study.