Empirical Study On Dividend Policy And Agency Cost Of Chinese Listed Company

Dividend policy is one of the three core financial activities in modern company. Since Miller and Modigliani published their classical paper in 1961, there have been many different ideas coming out to challenge the MM theory. After more than 40 years of evolution, dividend policy theory has been enriched and developed from many aspects, though until today research is still going on and there has not been a widely accepted conclusion.Agency theory is one of the mainstream theories to explain the dividend policy. Its basic idea is that, dividend policy can be used to solve the agency problem arisen from the separation of ownership and managerial authority effectively. Early researches on corporation governance focus primarily on the traditional agency problem. While in recent years, some scholars point out that, except in several highly market-oriented countries like the U.S. and UK, where company is controlled by a large number of shareholders, in most other countries, the ownership structure is much more concentrated, which brings out another problem that large shareholders expropriate minority shareholders to pursue private benefits.In year 2000, in an effort to regulate operation of the stock market and protect the benefit of minority shareholders, the China Securities Regulatory Commission put it a prerequisite for listed company to distribute cash dividend before they're allowed to issue more stocks. However, it's still out of control whether the large shareholders make dividend policy based on their own benefits or not. Another point is that, it's difficult to tell if purpose of distribution of cash dividend is really to reduce the amount of cash surplus, or simply a bait dropped by the large shareholders to net in more money. The author tries to focus on the "Agency Theory" of the dividend policy, analyze the characteristics and affecting factors of dividend distribution in Chinese listed companies and, applicability of the foreign "Agency Theory" in China.The thesis is divided into five chapters. Chapter 1 is a summary of literatures referred to, outlining the primary dividend policy theories prevailing in western countries, and corresponding researches carried out in China. Chapter 2 is the detailed analysis, with description of existing dividend policy in Chinese listed companies, considering the specific marketing environment, the author probes into the problemswith the application of Agency Theory in China, and brings out hypothesis and ideas. Chapter 3 lists out research methods used and concept of design, including selection of samples, source of data, definition of variables and descriptive statistics. Chapter 4 is the result and verification of empirical study, with factor analysis, regression analysis, and robustness test. Chapter 5 is the conclusion with limitation of subject thesis and suggested direction of further research.