The Evolution Of Cash Dividend Institution

Agency Cost Theory of dividend is one of the leading theories in western dividend policy. Its main viewpoint is that dividend distribution could cut down the agency cost availably. Affecting by the phenomenon of big control shareholder status and by split share structure, the application of leading western theories in dividend policy has large limitation, and the role of dividend distribution in reducing the agency cost cannot be fully displayed in China. Even that the dividend distribution becomes a legitimate tool used by listed companies to transfer corporate resources for non-tradable stockholders. on April 29, 2005 the China Securities Regulatory Commission launched an experimental share flotation reform work, and with the finish of reform, the interests between the non-float shareholders and the floating shareholders are trend to be showing no difference. In the circulation of the state-owned shares and the institutional shares, the ownership structure of listed companies tend to be dispersed, and the checks and balances between the shareholders will be enhanced. Whether the environment will affect the dividend distribution of listed companies? Whether the western dividend agency cost theory can explain the dividend distribution of our listed companies?The paper first analyzes dividend policies in the companies which have dispersed and concentrated ownership structure by using agency cost theory, and explains the application of agency cost theory in China's listed companies. These analyses provide a theoretical basis of empirical research in the motivation of cash dividend distribution. Then, using 2004 and 2006 data on listed companies, the paper studies the relationship between the level of cash dividend distribution and the ratio of the first large shareholding with the empirical research method. Empirical results indicate that before the share flotation reform, the listed companies had the motivation to transfer the companies' resources for non-tradable stockholders by paying cash dividend. But after the share flotation reform, the listed companies gradually have no motivation to transport the companies' interest for non-tradable stockholders by paying high cash dividend; and the companies also didn't invade and occupy the small shareholders' interest by none dividend distribution or low level of dividend payment. Therefore, the impact to the listed companies of share flotation reform to is emerging gradually. Finally, based on the analysis of theoretical and empirical results, combined with the existing specific issues of listed companies, relative suggestions are put forward to improve and perfect listed companies' dividend policies. The results will have a certain theoretical and practical significance to our country for further improving dividend policy, protecting the interests of investors and evaluating the effect of this share flotation reform.