Equity Structure、Growth And Cash Dividend

Dividend policy, which is called"the mystery of dividend", is one of the most important financial decisions. The series of dividend policy are complicated and conflicting. It can reflect the motives and goals of managers、boards and controlling shareholders. So, dividend policy is a double-edged sword. On the one hand, we are confused by its conflicting series, on the other hand, it can become an useful tool to understand the motives of managers、boards and controlling shareholders if been made good use of.Recent years, the high cash flow dividend policy of public firms, which is supposed to being regarded as an improvement in Chinese stock market, have received criticism form both scholars and economic reviewers. Why?It is no doubt that equity structure has a critical impact on cash flow dividend policy, whereas most literatures that were related to them were limited to the level of shares and nature of the first large shareholders, few involved in ultimate controlling shareholders. It is the exploitation of ultimate controlling shareholders to the other shareholders, rather than the first large shareholders to small and middle shareholders and managers to shareholders, that becomes the most crucial agency problem in firms where ultimate controlling shareholders exist. So it is essential to study high cash flow policy in the perspective of ultimate controlling shareholders. This paper may have two contributions:first, we improvement the measures of share balance, second, we examine whether or not share balance could confine the preference to high cash flow dividend of ultimate controlling shareholders.The remainder of this article was organized like this:we first reviewed the literature about firm growth、cash flow dividend、ultimate controlling shareholders and share balance. We used264listed companies from13industries of Shanghai security exchange market main board as sample. We did descriptive statistics analysis to the sample, correlation analysis to the variables. Hierarchical regression analysis was adopted to examine our hypothesis. The software tool we used was SPSS18.0.We draw our conclusion below:The rapid growth firms are apt to assign high level of cash dividend when control and cash flow right separation of ultimate shareholder exists. Control and cash flow right separation of ultimate shareholder have significant positive moderate effect to the relation of growth and cash dividend. Although equity balance can weaken the occupation behavior caused by the separation of control and cash flow right to some extent, but the effect is not significant, even if we have improved the methods of measurement of the equity balance.There are three contributions of this paper:A new perspective was given to comprehend the motive of ultimate controlling shareholders, Secondly, We examined the role played by equity balance in the process of exploiting by ultimate controlling shareholders through improving the measure of equity balance. At last, we summarized the proposals given by scholar, and proposed to make use of the social governance (media, etc.) in order to supervise the behaviors of ultimate controlling shareholders.