A Study On The Influence Of The Agency Cost Problem On The Cash Dividend Policy Of Listed Companies In China

Since the two famous financial experts, Modigliani and Miller, started research on dividend policy in 1961, theoretical study of dividend policy has attracted much academic attention, and many scholars have published their researches. Until now, dividend policy has become one of the three main corporate finance policies, besides finance policy and investment policy. Dividend policy is related to the decision whether a listed company should allocate or retain earnings for reinvestment, and it also plays an important role in the company's management. Based on the impact of agency problem on cash dividend policy, the related issues are discussed and researched.From the angle of the agency problem to study the dividend policy has become very important modern dividend policy research. Rozeff, who first put the agency issue into cash dividend policy research, used number of ordinary shareholders and insider's ownership to represent the factors of the cash dividend decision model, and concluded that cash dividend can reduce agency cost. Then, many scholars published many researches on this problem. However, with economic development, there are always new perspectives and new methods in the dividend policy research, hence no unanimous conclusion is reached. It still remains a "puzzle".First, this paper uses standardized research method to analyze current dividend policy and current agency problem. By summarizing domestic researches and analyzing recent-decade data, we figured out following characteristics of the cash dividends:First, the payment is unstable, discontinuous; Then, compared with foreign listed companies, proportion of the domestic listed companies who grant dividend by cash is much low; Besides, the cash dividends of the listed companies is at a low level, and there is large difference of their payments. And this paper also analyzes agency cost problem by theory, concluding that it has a significant impact on cash dividend policy.Second, this paper uses empirical approach to analyze the influence of agency problem on cash dividend policy. From the angle of demonstration, this paper has only selected data of the listed companies in Shanghai & Shenzhen "A" stock markets, between year 2004 and 2007, as samples. Binary discrete choice model and OLS model are used to study the factors that affect cash dividend distribution, and panel data model are also used, along with multiple linear regression analysis, to study the factors which affects the payment level of cash dividend. The result shows that agency relationship between shareholder and manager has a great impact on cash dividends; agency relationship between shareholder and creditor has a great impact on it too. Agency relationship between large and small shareholders also has a certain impact on cash dividend policy, and the features of Chinese security market make the impact even more complex. In one word, according to the results, agency problem has a certain impact on cash dividend policy. Finally, referring to the agency problem embodied in the dividend policy in our country, this paper has advanced some proposals, in the angle of internal governance and construction of external environment to help build standard dividend policy and promote healthy development of capital markets.