Research On The Institutional Environment,Political Connection And Dividend Payout Policy

Cash dividend distribution as one of the most basic and controversial financial policies for listed companies is an important means for investors to share enterprise operation achievements as well as an important tool for supervision departments to emphatically focus and maintain capital market stability.For enterprise,payment of cash dividend will result in cash flow-out and cause enterprise capital shortage in front of investment opportunities.Otherwise,enterprise will fall into a passive situation and supervision dilemma in subsequent equity capital re-financing mainly because enterprise equity financing ability in capital market is not only influenced by its own financial characteristics but also limited by various external system factors.At presents stage,under the system background of imperfect capital market construction,backward financial development and sluggish promotion of legalization progress in China,listed companies driven by capital benefit-pursuing property have actively adjusted and adapted to the market,spent a large amount of time and energy on political participation,and constructed political connection for the purpose of bringing financial convenience,taxation preference,government subsidiary and other resource allocation benefits to enterprise.In other words,the fundamental reason of political connected behaviors in listed companies is political relevance as the “bridge” to dredge company's financing channels can effectively alleviate financing restrictions and help companies out of external financing predicament.Even so,few scholars have studied political relevance between listed company and cash dividend behavior.Thus,under the unique political and economic background of China's economic entity in transition period,starting from listed companies' “interest-pursuing” motive of actively adapting to external political environment and establishing political relevance,this paper has put the company interior governance mechanism with exterior system restriction mechanism in the same framework to make systematic and in-depth research on listed company's cash dividend behavior under macro and micro influences.The overall theoretical analysis and empirical test results of the paper show that,listed company's cash dividend behavior is represented mostly as a decision-making result of trade-offs after company controller has comprehensively considered both macro and micro financing environment.This paper has firstly constructed the theoretical framework that political relevance affects company's dividend distribution behavior,and empirically tested the influence of political relevance on listed company's dividend behavior difference in in both width and depth aspects.Secondly,this article has made experience study from marketization progress,monetary policy regulation,“semi-mandatory dividend” policy and other external system factors,and tested the influence of external system changes on the relationship between political relevance and enterprise dividend.Studies in this paper have enriched the relevant research on cash dividend influence factors and economic consequences of macro external system environment,and meanwhile have provided some enlightenments for perfecting China's dividend supervisory policy.Main paper contents and research conclusions:With the situation that enterprises try to construct and maintain political relevance for more scarce resources in China's transition economy as background,based on trade-off theory and financing restriction theory,this paper has made inferential analysis on interests that enterprises have obtained from establishing political relevance from the perspective of resource allocation,and then used two views of political relevance,“resource effect” and “social burden effect” to deduce and analyze possible influence channels of political relevance on company's dividend policy from two aspects.Then the paper has further divided political relevance into depth and width dimensions based on social network theory and stair hierarchy theory,used listed company data in Chinese capital market for empirical test and investigated its influence on dividend behavior difference.Next,the paper has depicted the financing restriction degree in front of companies from dimensions of enterprise scale and property nature,and expansively discussed the influence of political relevance on enterprise dividend behavior with different scales and different property control characteristics.The conclusion shows that political relevance will have difference influence on enterprise dividend behaviors with different financing restrictions,which has provide direct support for the thesis that political relevance influences company's behaviors through credit channel.Under the transitional background and relation-dominated social structure,micro-enterprise's financial behaviors are influenced by macro monetary policy and the widespread political relevance.This paper will extend the influence of monetary policy to company's cash dividend policy based on the traditional micro influence factors.Then,starting from two views of political relevance,“resource effect” and “social burden effect”,this paper will ratiocinate the comprehensive influence of political relevance and monetary policy on company's dividend behavior by combining with the micro conduction mechanism of monetary policy credit channel.Research shows that enterprise with political relevance during monetary deflation period can alleviate the adverse impact of money squeeze on company's cash dividend to a certain degreed.Furthermore,after sub-dividing political relevance into depth and width dimensions,this research has found that political relevance has higher impact in width dimension on company's dividend behavior than in depth dimension during the period of money squeeze.But the dividend stability of enterprise with political relevance is poorer.Supervision authority has issued a series of semi-mandatory dividend policies aiming managing the current “valuing financing but neglecting dividend” phenomenon in Chinese listed companies.The fundamental mechanism that policies can restrict enterprise distributing dividends is that enterprise has refinancing demand and intends to satisfy their own refinancing demands through dividend financing channel provided that they can reach the “threshold dividend” stipulated by SFC Committee so as to restrict enterprise dividend behaviors.But the resource effect of political relevance has loosened enterprise external financing restrictions and then restrained the governance effect of semi-mandatory dividend policy.Theoretical analysis and model inference show that political relevance can truly bring resource effect for enterprise.Resource effect of political relevance has alleviated enterprise external financing constraint and then restrained the governance effect of semi-mandatory dividend policy on company's dividend behavior.Meanwhile,the research has also finds that the resource effect of political relevance has aggravated the adjustment frequency of company's dividend and made China's unstable dividend policies more complicated and confusing.Political relevance is a substitution mechanism of poorer system environment(Tian Lihui,Zhang Wei,2013).The more unbalanced of marketization process in different areas of China and the lower of regional marketization degree,the more significance of political relevance on enterprise resource effect.On the contrary,the higher of regional marketization degree,the lower limitation of the enterprise financing through market channels.Thus it shows that enterprise's active construction of political relevance is an informal substitution means for Chinese enterprises to overcome market system defects.Through model building,i.e.empirical test method,the paper has systematically discussed the influence of political relevance on enterprise dividend behavior and adjusting effect on marketization process.The research has found that with ever-accelerating marketization and high-speed development of financial system,the influence of political relevance that conducting to dividend behavior on enterprise financing restriction is disappearing gradually.