| Dividend policy is not only one of the earliest studied classic topics in finance,but also a difficult problem which modern finance theory has failed to solve after development for half a century.Domestic and foreign studies have shown that dividend policy is not only influenced by a company's financial aspects such as company size,liquidity,earning capacity,etc.,but also by governance factors including structure of the listed company,the impact of the Board of Directors and corporate debt maturity;and affected by macroeconomic factors.In recent years,the rise of "Law and Finance" has provided a new perspective and methord for the research on dividend policy and legal protection for investors--an institutional factor at the state level,has been included in the research of dividend policy.Medium and small investors are indispensable participants and finance providers in the development process of any stock market.In case the protection of medium and small investors is not handled properly,the stock market will lose its solid foundation and listed companies will risk losing equity financing,a very important financing channel.Consequently,the normal functioning and sustained healthy development of the stock market will be seriously hindered.Therefore it is the common goal for the development of stock markets in all countries to protect the interests of medium and small investors in terms of institutionalization,to maintain investor confidence,to give investors reasonable return on investment,and to provide investors with opportunities to share the fruits of economic growth.China's stock market was gradually established and developed in the process in which a highly planned economy switched to a market economy.Despite the " Full Circulation Vision " already achieved,problems such as “dominance of one single stock” and “insider control” are still prevalent in the internal governance mechanism of listed companies,resultantly the proxy problem between controlling shareholders of listed companies and medium/small investors remain prominent..LLSV(2000)was the first to analyze dividend policy with the combination of proxy policy and legal protection for stockholder's equity,holding that one of the effective ways to solve the proxy problem is to improve the legal system for shareholder protection.Dividends can play an important role in solving the agency problem between corporate insiders(controlling shareholders and managers)and outsiders.Therefore,the study of the role of the legal protection of medium and small investors on cash dividends not only has important theoretical significancebut also has important practical significance.On the basis of combing the relevant theories and research literature of dividend policy,the paper analyzes the mechanism of legal protection of medium and small investors and cash dividend policy.Based on the theory of dividend agency cost,application "Law and Finance" research perspective and method,this paper mainly research the relationship between legal protection of medium and small investors and cash dividend policy.The paper is divided into eight chapters,and the specific content of each chapter is as follows:Chapter One serves as an introduction.It introduces the research background,significance,research methods,research objectives,papers framework and innovation of the paper.It also defines the concept and focus.Chapter Two reviews and comments on dividend policy theory,and traces back to the origin of agency theory of dividend.This chapter is the theoretical basis for subsequent empirical research.Chapter Three first of all analyzes how controlling shareholders uses controlling powers they have to obtain personal gains.Then it explains the action mechanism of legal protection of medium and small investors on cash dividend policy.Lastly,on the basis of LLSV(2002)theoretical models,it tries to establish a simple theoretical model showing the relationship between legal protection of medium and small investors and cash dividend policy.Chapter Four first of all describes the evolution courses of legislation and enforcement situation of the legal protection of medium and small investors.It evaluates both the legislation levels and judicial efficiency of the legal protection of medium and small investors.Lastly,it compares the legal protection of medium and small investors in China and worldwide in threes angels,namely legislation,law enforcement and protection mechanism(combining two aspects regarding comprehensive legislation and law enforcement)Chapters Five Six and Seven are the focus of this paper.Chapter Five with our A shares market 1995-2014 annual 2198 companies panel data for the study sample,we examine the influence of the legislation on cash dividend policies,in three stages.Chapter Six with China's A-share market 2001-2009 annual 2047 companies panel data for the study sample,we mainly do empirical tests on the influence of the enforcement(including National law enforcement and Provincial law enforcement)on the cash dividend policies of listed companies.Chapter Seven with our A+H shares and A shares market 2007-2014 annual companies panel data for the study sample,we examine the influence of different legal mechanisms of the protection of medium and small investors on cash dividend policies.Chapter Eight draws the final conclusions,and proposes scientific and reasonable policy recommendations.Finally it explains the limitations of the study and looks into the sustainable studies in the future.Main findings of this paper are as follows:Firstly,the legislation of legal protection of medium and small investors in China is in the medium level international.However,due to a lack of enforcement level,the overall level of legal protection for medium and small investors in China is below that of other countries and regions.In order to raise the overall level of legal protection of medium and small investors,on the one hand,the legislation of protection of investors should be continually improved,and legal concepts of investors have to be fostered;on the other have,the self-discipline system of the enforcement of legal protection of investors has to be combined with public enforcement mechanism and civil compensation system,and legal enforcement needs to be strengthened.Secondly,according to the development of China's legislation of legal protection of medium and small investors,we examine the influence of the legislation on cash dividend policies,in three stages.Research indicates that in not good enough period of the legislation system,thesubstitute model of dividend agent theory is established.With the continuous improvement of the legislation of investor legal protection,the outcome model of dividend agent theory is established.From the national law enforcement and provincial law enforcement at two levels,this paper analyzes the influence of thelaw enforcement on cash dividend policies.Research indicates: In the process of thelegal legislation gradually becoming perfect,the enforcement(including National law enforcement and Provincial law enforcement)has a significant positive impact on the cash dividend policy of listed companies,so the outcome model of dividend agent theory is established.Therefore,this paper argues that through establishment of the legal protection mechanism for medium and small investors in its full sense,cash dividend policy can fully play its role in reducing proxy costs.The empirical test results support relevant theories of the " law and finance".Thirdly,with the development of the securities market for more than 100 years,Hong Kong SAR of China has high perfected legislation of the protection of medium and small investors,efficient securities market supervision system and strict information disclosure mechanism.So there are significant differences in the level of protection of medium and small investors,between Hong Kong and the Mainland.The results of empirical tests show that the A+H-share listed companies relative to the A-share listed companies have stronger incentive and higher level of cash dividendspayment,because A+H-share listed companies subject to more stringent system of legal protection of medium and small investors.The main innovation aspects of this paper are reflected fourfold:Firstly,this paper sums up and summaries theories and viewpoints on the mechanism of action of legal protection of medium and small investors on cash dividend policies.On the basis of that,it tries to establish a model showing the relationship between legal protection of medium and small investors and cash dividends,thus providing a comparatively common legal explanation on the mechanism of action of legal protection of medium and small investors on payment of cash dividend.Secondly,past studies on the relationship between legal protection of investors and cash dividends are mostly based on cross-country static comparison,and are unable to investigate on the development of the legal protection of investors in a certain country itself on the cash dividend policy.In view of this,the paper breaks the tradition of the research angle that analyzes the relationship between legal protection of investors and cash dividend policies with country and law origins as the starting point.This paper fully examines the influence of development process,of legal protection of medium and small investors on cash dividend policies.Thirdly,using the data of China The paper deeply analysis the relationship between legal protection of medium and small investors and cash dividend policies,from the legislation,the state law enforcement and the provincial law enforcement three levels.It adds meaningful empirical evidence from an emerging economy to the literature on dividend policy and "Law and Finance"Fourthly taking the background of "one country two systems",in terms of legal mechanism for the protection of medium and small investors,there are obvious differences between Mainland China and Hong Kong SAR.These differences provide typical samples for the research of legal protection of medium and small investors and cash dividend policies within one country.Therefore,this paper does empirical studies in close relation to the peculiar institutional background of China,and examines the influence of the different protection mechanism of medium and small investors on cash dividend policies. |
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