The Relationship Study Between Institutional Investor And Cash Dividend Policy In China

Institutional investors are not only the nucleus of the development of security market every country,but also the important factor for the optimization of corporate governance.They have lots of capital,and their behavior of investment action will influence the market severely.In our country,the stock market is undeveloped and its capacity is small,but under the strong support of our national policies,institutional investors gain rapid development and they have the power to gain the market directions to some extent.Our article research the action of institutional investors in stock selection and corporate governance participation from the cash dividend policy.Firstly,based on the Signal Transfer Theory of Dividend and the Agency Theory of Dividend,we analyze the relationship between institutional investors and the cash dividend policy.Secondly,we expound the development of institutional investors and the distribution of cash dividends situation in our country.Lastly, based on the date from 2004 to 2006 in our county,we use positive approach to tests the relationship between institutional investors and the cash dividend policy.The empirical results shows:(1) compare to the company with un-paying cash dividend and low cash dividend,the institutional holdings of paying-dividend company and the high-dividend company are evidently higher;compare to the company with low institutional holdings,the level of cash dividend of high institutional holdings company is evidently higher.(2) institutional holdings have positive relation with cash dividend,which suggest that when selecting stocks, institutional investors have cared about the listed company's cash dividend level,not only about its risk,profitability and growth.(3) The probability of whether companies have cash dividend and the level of cash dividend have positive relation with institutional holdings,which suggest institutional investors had participated corporate governance and effected company cash dividend policy.(4)We also use the simultaneous equations to test its stability;it supports the above conclusions too.