The Controlling Shareholder Of Listed Companies In Our Country And The Cash Dividend Research

Cash dividend is one of the most important financial decisions for listed companies. There are many factors that might influence cash dividend, such as company characteristics, industry characteristics. Controlling shareholder, who is the actual controller of listed company, has a great impact on making the dividend policy. According to "Rational Economic Man" assumption, controlling shareholder might act to maximize its own interest, thus the cash dividend policy is likely to be influenced by controlling shareholder as well. In China, it is common to see a single shareholder own a large share of the company’s stock, and these shares owned by the majority shareholders are nonnegotiable due to China’s unique share segmentation system. The characteristics mentioned above are quite different from western mature stock market. Thus dividend theories based on western mature stock market may not be applicable in the Chinese context. Under this background, analyzing the relationship between controlling shareholder and cash dividend policy has both theoretical and practical significance.Based on literature review on cash dividend policy, this paper collects previous research on the relationship between controlling shareholder and cash dividend from home and abroad. After that and by analyzing the current situation of cash dividend policy and controlling shareholder of all listed firms in China, this paper comes with several hypotheses for empirical test. Based on sample of922listed companies in A share market from2003to2010, this paper analyzes the relationship between controlling shareholder and cash dividend policy both from the direct control perspective and the ultimate control perspective. The impact of the reform of share segmentation system started in2005on the relationship between controlling shareholder and cash dividend policy is also included. Besides, the market response to2008China Securities Regulatory Commission stipulation requiring cash dividend payments is analyzed to reveal the attitude of outside shareholders to cash dividend payments.The results show that, the proportion of controlling rights held by controlling shareholder, the concentration of ownership and the proportion of nonnegotiable shares have a positive influence on cash dividend policy; while the proportion of shares held by the second largest shareholder and the ownership balancing power have a negative influence on cash dividend policy; while the separation between controlling rights and ownership of the ultimate controlling shareholder has a positive influence on cash dividend policy though not significant. After the reform of share segmentation system, the impacts from the positive factors mentioned above are weakened, while the impacts of the negative factors almost remain the same. The economic nature of direct controlling shareholder can have a significant influence on cash dividend policy with government controller pay-out ration larger than non-government controller. From the ultimate controlling shareholder’s type, both the propensity to pay and the pay-out ratios of company under the control of state-owned enterprise are significantly higher than company under the control of government agency. And the propensity to pay and the pay-out ratios of company under the control natural person are relatively lower than company under the control of legal person. What’s more, market showed negative response to the2010CSRS stipulation which indicates that outside shareholders do not have a preference on cash dividend.The innovations of this paper lie in:(1) Analyze the controlling shareholder from the direct perspective as well as the ultimate perspective;(2) Consider the impact of the reform of share segmentation system on the relationship between controlling shareholder and cash dividend policy;(3) Test the market response to2008CSRS stipulation requiring cash dividend payments to reveal the preference of outside shareholders on cash dividend.