Dividend Policy And Corporate Governance

Modern enterprise theories make incomplete contract and asymmetric information between principal and agent as one of the basic hypothesizes. Agency problems caused by ex ante incomplete contract and ex post asymmetric information exist generally. Agency theory of dividend policy disclosed the agency conflicts implicated in dividend policy. Therefore, dividend policy must be propitious to one kind of stakeholders but harm to other kind of stakeholders at the same time. The essence of corporate governance is that principals damage agents by use of asymmetric information and incomplete contracts. Corporate governance had been designed as a governance mechanism to mitigate governance problems or agency problems.As a relation contract of property right, corporate governance decides the arrangement of corporate control in enterprises, and decides the vote rights of making dividend policy too. In term of this view, the real choice of dividend policy is a game equilibrium of all kinds of stakeholders under special corporate governance. But on the long terms, as a mechanism, dividend policy can inspirit interior stakeholders and exterior investors of enterprise to deal with corporate control. The transaction of corporate control will readjust the game pattern, and a dynamic equilibrium between dividend policy and corporate governance will come into being.As the micro-carrier of corporate governance affecting dividend policy, there is a market for corporate control. The efficiency of market for corporate control will affect the efficiency of corporate governance, and affect the efficiency of dividend policy further. Perfecting the structure of capital market and developing the market for managers in our country to improve the efficiency of market for corporate governance will be the efficient means to improve the efficiency of corporate governance and standardize the dividend policy.