The Nature Of Controlling Shareholder And Tunneling

Agency problems between controlling shareholders and small shareholders are hot topics at the forefront of the research about corporate governance. Cash dividend policy is an important financial decision in a listed company, and also a central part of the balance of interests among the controlling shareholders, small shareholders and other stakeholders. Based on the perspective of cash dividend policy, this article reveals the impact on the cash dividend by the nature of the controlling shareholder and tunneling both theoretically and empirically. It aims to enhance the understanding and awareness on the agency problems between controlling shareholders and small shareholders, and to do some basic work to further standardize and improve the governance structure of listed companies in China. Analysis in depth of the agency problems between controlling shareholders and small shareholders, are of great theoretical and practical significance to promote the research and development of corporate governance theory, to enhance the legal protection of small shareholders, to enhance the company's market value, and the healthy development of capital markets.The research idea is as follows:Tunneling and cash dividends are two major ways to obtain the interests of controlling shareholders. The nature of the controlling shareholders not only affects the tunneling to listed companies by controlling shareholders, but also acts on the company's cash dividend policy. As two main ways to obtain the interests by controlling shareholder, tunneling and cash dividend policy have the relationship of counter-balance. In other words, the controlling shareholders'demands of different nature directly affect the amount of tunneling to listed companies, while the size of tunneling has a direct effect on the cash dividend policy. Based on the above research ideas, this article consists of the following sections:Chapter I:Introduction. This chapter begins by describing the background and significance of this research, and then presents ideas and logical structure, a clear choice of theoretical analysis tools and research methods, and features of this article.Chapter II:Literature Review. Three aspects of domestic and foreign research results have been reviewed in this part:the controlling shareholder and tunneling, controlling shareholders and cash dividend policy, the relationship between tunneling and cash dividend policy.ChapterⅢ:Theoretical analysis and research hypothesis. This part firstly defines some basic concepts relating in this article, and then elaborates on principal-agent theory, and analyze in depth the causes of tunneling. On this basis, we put forward the hypothesis of this article.ChapterⅣ:Research design. This paper uses 1878 sample data ultimately after a series of screening, and makes descriptive statistics on the distribution of industry and annual. Subsequently, according to the hypothesis, this paper constructs three regression models, and variables are defined.ChapterⅤ:Empirical results and analysis. First of all, this chapter made descriptive statistics on the full sample, state-owned sub-sample and non-state-owned sub-samples. Secondly, the paper makes multiple regression analysis. Finally, in order to ensure the reliability of conclusions of the study, this paper made a robust test. It is found that a negative correlation between the nature of controlling shareholder and tunneling remains, and is also significantly improved a lot.Chapter VI:Research findings and inspiration. This study concludes with the following main aspects:First, the cash dividend payout level of state-owned listed company is lower than that of non-state-owned listed companies. Second, the size of in the state-owned listed companies is higher than that in non-state listed companies. Third, this study finds that, based on the nature of the controlling shareholder, share in cash dividends and capital occupancy levels show significant negative correlation. Forth, the proportion of holdings by institutional investors and cash dividends, showed a significant positive correlation.Innovations and scholarly contribution of this paper is mainly reflected in the following areas:Firstly, the article is based on the perspective of the cash dividend policy to study agency problems between controlling shareholders and small shareholders in China's special market environment, in order to make some basic work to further standardize and improve the governance structure of listed companies in China. Secondly, from the perspective of cash dividend policy, this article explored out new factors impacting cash dividend policy. In other words, tunneling affects the formulation cash dividend policy. Thirdly, this paper used a new metrics of tunneling.The inadequacy of this paper is mainly manifested in the following aspects: First, the nature of the controlling shareholder has adopted a streamlined approach, and there is no distinction in more detail. Second, this article selected cash dividends per share as a measure of the level of dividend payment, but its explanatory power need further verification.