External Regulation, Controlling Shareholder's Equity Pledge And Cash Dividend Policy

In recent years,China's capital market has been further improved and developed.As a new financing way of guarantee,equity pledge has been favored by more and more people.On the one hand,the low cost and fast time of the equity pledge loan help to broaden the financing channels of the enterprise.On the other hand,according to the sixty-eighth article of the security law of China,"the pledgee has the right to collect the fruits of the quality goods",so the cash flow rights of the pledgor will be restricted during the stock pledge,and the control right is not transferred,This will lead to the separation of control rights and cash flow rights of controlling shareholders,which will exacerbate the agency problem between controlling shareholders and small shareholders.On the basis of the principal agent theory between the controlling shareholders and the small and medium shareholders,this paper empirically examines whether the stockholder's equity pledge will inhibit the issuance of cash dividends,and by adding external supervision to the holding of the controlling shareholders' equity pledge,is the initial research sample of all A shares listed companies in China's Shanghai and Shenzhen two cities in 2007-2016 years.This is a new perspective for the study of cash dividend policy.Through empirical research,the conclusions of this paper are as follows:(1)through Logit and Tobit regression analysis,this paper finds that the holding shareholder equity pledge will significantly reduce the willingness to pay for cash dividends and the level of payment,and the higher the pledge ratio,the higher the number of the pledge stock,the higher the proportion of the total share capital of the company,the shares of the controlling shareholders.The pledge of rights has a greater negative impact on cash dividend policy.(2)through the addition of the external supervision and the equity pledge of the controlling shareholders,this paper finds that the stricter the external supervision is,the more it can alleviate the agency conflict between the controlling shareholders and the small and medium shareholders,thus helping to reduce the negative influence of the controlling shareholders' equity pledge on the willingness and level of the cash dividend distribution.In particular,thehigher the quality of the external audit and the greater the supervisory role,the more effective it can be used to mitigate the negative impact of the controlling shareholders' equity pledge on the willingness and level of cash dividends,and the more strict the company's regulation is,the more effective the company's regulation is,the more effective it is.The negative effect of controlling shareholder's equity pledge on the willingness of cash dividend is negative,but it can not reduce the negative effect of controlling shareholders' equity pledge on the level of cash dividend.In a word,the stricter external supervision can help to restrain the motivation and behavior of controlling shareholders to gain control of private interest through surplus cash,which will improve the willingness or level of issuing cash dividends.