Study On Dividend Policies And Corporate Governance Of China's Listed Companies

Corporate dividend policies have been subjected to intensive theoretical and empirical investigation for over forty years. Scholars bring forward many theories to explain corporate dividend policy. Among them signaling theory and agency theory are the major ones. This paper investigates the relationship between corporate dividend policy and corporate governance based on agency theory.After an international comparison of governance effect of dividend, my research indicates dividend can alleviate agency conflicts between not only shareholders and managers, but also large shareholders and minority shareholders. This paper reveals dividend policies are gradually becoming rational in China. Based on theoretical analysis, I conclude that agency theory provides a reasonable explanation for dividend policies in China.Using logistic regression and multivariate regression analysis methods, the paper empirically analyzes the influence of the corporate governance on dividend policies of listed companies from the perspective of dividend decision-making and dividend payout ratio. The results are consistent with the outcome agency model of dividends.Using corporate value as a proxy for the corporate governance effect, my research shows that there is a significantly positive relationship between dividend and market value of the firm, which means that dividend can act as a disciplinary mechanism to reduce agency costs in China securities market. This result shows that improvements of corporate governance and minority shareholders protection enhance dividend payout and dividend effect on corporate governance.