Zero-Leverage,Cash Dividend And Inefficient Investment

Classical theories such as capital structure,trade-offs and agency costs believe that a company's modest liability can increase the value of the company.But there is an interesting phenomenon in reality,some companies do not use or use very little debt financing in the capital structure.Research shows that zero-leverage companies are not limited to developed countries and have a gradual growth trend in China.The proportion of zero-liability listed companies in China rose from 3.82% to 17.94% between 1996 and 2017.This phenomenon deviates from the traditional theory of capital structure and is known by the academic community as the "zero leverage".In recent years,with the continuous research of “zero leverage” by domestic and foreign scholars,the study of the economic consequences of zero leverage has attracted the attention of Chinese scholars.Relevant research found out that zero leverage companies have stronger profitability and better performance than leveraged companies.At the same time,scholars also study the stock returns and agency costs of zero-leverage companies due to the lack of creditors.The main motivation for enterprises to choose zero leverage policy is financing constraints and financial flexibility.Although only one article discusses the influence of zero leverage on inefficiency investment,but it doesn't distinguish the motivation of the zero leverage policy of different companies,then do different types of zero leveraged companies have the same effect on inefficient investment? Does the cash dividend effect the relationship between zero leverage and inefficient investment? Is it positive or negative? Under the background of China's economic transformation and upgrading and “de-leverage and cost reduction”,the research conclusions of the article provide decision-making reference for enterprises to rationally select the capital structure and increase investment efficiency.This study analyzes the literature in related fields,uses a combination of theoretical deduction and empirical research,selects A-share listed companies from 2009 to 2017 as research samples,and examines the relationship between zero-leverage and inefficient investment.And further discussed the relationship between zero-leverage(non-financingconstraint)and over-investment,zero-leverage(financing constraint)and underinvestment after zero-leverage is divided into two dimensions: non-financing constraints and financing constraints,and cash dividends for the above relationship Regulatory effect.The research results show that zero leverage is significantly positively correlated with inefficient investment.That is,compared with leveraged companies,zero-leverage companies face higher levels of inefficient investment.Dividing the zero leverage into two dimensions:non-financial constraints and financing constraints: Zero leverage(non-financial constraints)is significantly positively correlated with overinvestment,and zero leverage(financing constraints)is significantly positively correlated with underinvestment.Further tests found that cash dividends have positive adjustments in the relationship between zero leverage(financing constraints)and underinvestment,and there is no regulation between zero leverage(non-financial constraints)and overinvestment.According to empirical research conclusions,this article puts forward relevant policy recommendations.