Empirical Analysis On The Governance Effect On Cash Dividend Policy

Dividend policy and corporate governance are two of the concerned issues in the study on corporate finance. This paper focuses on the impact effect between them, and takes advantage of the similarities and differences of two theories for explaining that kind of effect. Combining the practice of China's capital market, the paper studies on how governance level of our listed companies impacts their cash dividend policy, what traditional theory should be applied to interpret the relationship, and why.On the basis of relevant references, it sum up two main theories to explain the relationship between governance and dividend policy:"substitute model"and"outcome model", and then discusses their theoretical fundament more deeply. By separating the listed company samples into different groups, it tries to find out the real criterion of dividing companies into"substitute samples"and"outcome samples", according to which, the paper founds its hypotheses.Basing on the financial, dividend and governance data between 1998 to 2006, this paper picks out"should pay"samples, and founds integrated governance variables, and makes regression study using Logistic regression method. Empirical result shows that"outcome model"applies to all our companies, different from the recent American result. At last, the paper brings out the interpretation to the empirical result in the perspective of this paper, pointing out that companies in our country are probable to be at week governance level.