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A Study On The Reform Of Split Share Structure And The Listed Company's Cash Dividend Policy

Posted on:2011-06-18Degree:MasterType:Thesis
Country:ChinaCandidate:X J ChenFull Text:PDF
GTID:2189360308482850Subject:Financial management
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Why do companies pay dividends? Why do investors like dividends? How many dividends should the company pay? It has been 30 years from Black put forward the "dividend puzzle", and it still has not reached the conclusion for theorists and practitioners. There is no view that can fully explain the "dividend puzzle." When the question is put forward in China, it will become a "mystery within a mystery."China's special background makes the company's dividend policy have the characteristics that the West does not have, so it can not be completely explained by the Western dividends theory. China's capital market has developed for a short time, the market mechanism is not perfect and investor protection laws are not adequate, all of these affect the dividend policy. So, to explain China's "dividend puzzle", we need to consider China's unique background and the using of the Western theory in China's market in order to explain the "dividend puzzle."Agency theory is an important theory that was currently used to explain the "dividend puzzle". The early agency theory concerned the agency problem under separating of two rights, it is the issue between management and shareholders. But modern corporate governance research shows that equity focus is the form used by the majority of companies within the world. Therefore, the agency issue under this form of corporate governance reflects a conflict between the controlling shareholders and small shareholders. Large shareholders can exercise effective control of the company, and often pursuit their own interests while transferring corporate resources, and damage the interests of minority shareholders.In China's capital markets, the special structure of listed companies caused conflict between large shareholders and small shareholders. Meanwhile, as the mechanism to protect the small shareholders are not perfect, coupled with the mechanism to restrict the behavior of large shareholders has not been established, the large shareholder often damage the interests of small shareholders by a variety of "benefit transfer". Cash dividends is one of a typical way, and it become a huge obstacle of China's capital markets and listed companies.In 2005 China began the reform of split share structure, which is to account the holding costs of the non-tradable shareholders and the tradable shareholders, and re-confirmed equity and turn the non-tradable shares into tradable shares. The purpose of the reform is to eliminate the roots that are long-term damage to the tradable shareholders and ultimately to improve the structure of listed companies and realize the function of resource allocation on capital markets. The reform ended in 2006, what kind of characteristics of dividend policy do listed companies have in China before and after the share reform? What effects will the reform of listed companies on cash dividend policy have? Will the dividend policy be favor for the investor protection after the reform? This is what to be studied in this paper.To study these issues, this article begin with the agency theory, and adopt the approach of combining theory study and case study, taking the reform of split share structure as the background, combined with current theories trends, and deeply analyze the changes in dividend policy of listed companies, which is to study the role of reform of split share structure from a point of view of dividend policy; using the case study approach to analyze the company's dividend policy after the reform of split share structure. Details are as follows.ChapterⅠ:Introduction. As the opening, this paper first proposes the background and significance of this research, and research content, research methodology and research framework, and identified research themes and ideas of this article for further study later provided the necessary groundwork.ChapterⅡ:The foundation and literature review of dividend policy theory. This chapter first review the relevant theory of dividend policy, from the traditional theory to the modern theory of dividend policy; It then describes the studying status of the agency theory of dividend policy at home and abroad, and make evaluation, and provide a theoretical premise for the research behind the writing, and lay the basis for analysis.Chapter III:The theoretical analysis of the impact of dividend policy of the reform of split share structure. This chapter begins by describing the split share structure in China, as well as the connotation of split share structure reform and its impact on the impact of dividend policy of listed companies, by way of theoretical research, in-depth analysis of the split share structure reform, the impact of the cash dividend policy, research shows that stocks change from the fundamentally changed the interests of major shareholders implementation mechanism, so that the major shareholders and the interests of small shareholders, convergence, thereby changing the behavior of major shareholders, so that our cash dividend policy of a gradual move toward a rational and conducive to protecting the interests of investors is conducive to stock market the healthy and stable development of the stock market allocation of resources to achieve effectiveness.ChapterⅣ:Analysis of the characteristics of dividend policy in listed companies before and after the split share structure. This chapter studies the influence of the reform of stock dividend policy of listed companies by comparing the split share structure reform of listed companies before and after the dividend distribution, thus testing the effect of split share structure reform. Through the study I find that stock cash dividend distribution before and after the reform there were obvious differences, share distribution of cash dividends after the reform has been greatly improved, indicating that China stock market is constantly becoming more mature.Chapter V:Case studies. This chapter first studies the dividend policy of Foshan Lighting by comparing the split share structure reform before and after, and analyzes whether it reflects all the interests of investors after the distribution of cash dividends. Analysis of the company's shares at the same time to change before and after the change in shareholding structure, the board changes in the board of supervisors, as well as changes in financial position, results in findings: Despite the stock after the share structure reform is no longer; due to the dominance; of the shareholding structure, corporate governance Structural change the relative shares of the former and more perfect, more in line with the requirements of modern corporate governance, but the stock's cash dividend policy after the reform there are still major shareholder cash suspected of infringement of the interests of small and medium investors. The main reason may lie in a long-term tradable shares of listed companies, controlling shareholders of the impact of deep-rooted, which makes the process of share reform in the dividend policy is still with Chinese characteristics, and high-dividend policy to reduce agency costs, contrary ChapterⅥ:Research findings and inspiration. This chapter finds the conclusions:in the China market the high dividend distribution does not mean that better investor protection. At the same time against the conclusions of the policy recommendations that could be from the policies on the regulation, a sound regulatory and other multi-pronged approach to further promote the healthy development of China's securities market.The main academic contributions of this paper are as follows:First, this paper uses case study approach and bases on agency theory, and start distribution of cash dividends from Foshan Lighting in the long-term high on China's share reform of listed companies before and after cash dividend policy, conducted in-depth analysis, which concluded that:a long-term tradable shares of listed impact of the company's deep-rooted reform made after the stock dividend distribution policy may still be the high does not mean that better investor protection. Second, data collection, the paper data collection spans, involving a total of nearly ten years before and after the time, making the results more comprehensive and more representative. Thirdly, the current domestic study of cash dividends is based on the split share structure in the context of research. In the context of tradable shares, the current cash dividend and whether it helps investor protection has not yet reached a consensus. After the reform of split share cash dividend policy and the study of the relationship between investor protections, domestic rarely mentioned in literature. From this point of view, this study has some theoretical significanceShortages of this article are:First, this paper uses a company as a case study representative, and it may make the results there are some limitations, the need for further empirical research evidence to prove that.Second, the source of data comes from the huge influx of information network, and News Network and CRMAR databases, data sources and my analysis, given the limitations, this article or inadequate.
Keywords/Search Tags:Cash dividend, Tunneling, Investor protection
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