Research On The Dividend Policy Of Chinese Listed Company Based On Agency Theory

Dividend policy is one of the most important financial activities in a company, for it is the continuation of the company's financing and investment activities. An appropriate dividend policy can not only establish a good corporate image, but also arouse the enthusiasm of investors, which will make the company consecutive develop. With easing the restrictions of MM theory, various theories are established to enhance people's understanding of the dividend policy. A lot of literature about dividend policy exist, however, domestic research is still in the exploratory stage, so there is still a plenty of room for us to research.Agency theory is one of the main theories to explain the dividend policy in the West, which contends dividends can help reduce agency costs. And it can also solve the agency problems due to the separation of ownership and management. Early researches main focused on the agency relationship between the shareholders and managers for highly dispersed equity. But in recent years, the focus of the agency problems shifts on the agency relationship between the minority shareholders.The complexity and particularity ownership structure of Chinese listed companies which comes from the restructuring of the state-owned enterprise and the imperfect capital market system make the agency problems more complex. So the agency problems exist not only between shareholders and managers but also between the controlling shareholder and minority shareholders. Because of the Non-standard dividend policy of listed companies, the SFC makes cash dividends as a necessary condition of re-financing since 2000, in order to protect the interests of investors and regulate the market. However, the true purpose of paying cash dividend by large shareholders is not clear. The reasons why the listed companies pay dividend and allot shares are still unknown. So the paper attempts to analyze the characteristics of dividend distribution of Chinese listed companies, and find out the factors affecting the dividend policy, in order to test the applicability of agency theory in China.The paper is divided into five chapters. ChapterⅠis an introduction, which describes the background, purpose, and the research situation, research methods. ChapterⅡreviews the Western theory of dividend policy, and introduced the major Western dividend policy theories. The third chapter is the theoretical analysis which analyzes the status of Chinese listed companies'dividends, and the agency problems according to the characteristics of listed companies and market environment. Chapter IV is the empirical part of the paper, and includes two parts. Its first part includes research methods, data sources, sample selection, hypothesis, variable selection and model building. And the second part describes the results of empirical research, including descriptive statistics, regression analysis. Chapter Five is the conclusion, including the conclusions and limitations, and the recommendations for listed companies.