Empirical Analysis Of The Impact Of Ownership Concentration And Legal Environment On Investor Protection After The Non-tradable Shares Reform

When the company’s management rights and ownership are separated,there will be potential agency problems.Small and medium shareholders face two types of principal-agent relationships.Since the manager does not own the ownership of the agency property,he will tilt the enterprise resources to himself,encroach on the client’s property,damage the interests of the shareholders,and this condition form the first type of agency problem.Due to the widespread existence of family holdings,state holdings and institutional holdings,listed companies often have a single controlling shareholder.The controlling shareholder uses the information asymmetry to implement the unfair distribution of interests and infringe the rights and interests of the minority shareholders,forming a second type of agency problem.Dividends are a form of corporate profit distribution,and the company distributes profits based on shares held by shareholdersDividends can be mainly divided into cash dividends and stock dividends.Among them,stock dividends can be counted as shareholders’ reinvestment in enterprises,and cash dividends can directly increase shareholder returns.At the same time,cash dividends can inhibit the on-the-job consumption and related party transactions of management and major shareholders.Cash dividends prevent management and major shareholders from encroaching on cash flow and are an effective means of solving the first and second types of agency problems.Thus the distribution of cash dividends improve the protection of investors.Due to the different backgrounds of the research period,the conclusions of the previous study on the rule of law environment and the impact of equity concentration on cash dividends often differed and even contradicted.After the share-trading reform,the major shareholders and the small and medium-sized shareholders have basically the same rights,and the major shareholders pay more attention to the company’s value and the interests of the minority shareholders.Based on this premise,this paper constructs a cash dividend distribution model based on the benefits and costs brought about by the rule of law environment and equity concentration in solving agency problems.The cash dividend data of listed companies from 2006 to 2016 after the share-trading reform was tested by the Tobit model and heterogeneous stochastic frontier analysis to test the hypotheses based on the theoretical model.The study found that the rule of law and cash dividend distribution showed a U-shaped relationship,while the concentration of equity and cash dividends showed a positive correlation.With the help of stochastic frontier analysis,it is found that the concentration of equity and the level of rule of law are inverse U-shaped with the level of company inefficiency.It can be seen that moderate equity concentration is conducive to strengthening supervision of management and inhibiting management’s agency problems.When the law is not particularly complete,the promotion of the rule of law environment will increase the cost of controlling shareholders to evade supervision,thereby reducing the company’s profits.After the level of the rule of law has increased to a certain level,the uncertainty of the punishment of illegal acts will inhibit the short-selling behavior and increase the company’s profits.At this time,the improvement of the rule of law can effectively enhance the cash dividends of shareholders,which in turn helps investors to protect.