Research On The Protection Of Minority Shareholders’ Interest Based On The Perspective Of Cash Dividends

There are two main ways for minority shareholders to gain benefit from the stockmarket. One is the capital gains formed by the price gap between buying and selling ofstocks; the other is the dividends distributed by listed companies. In our stock market,thereare some omissions on the implementation of the legal supervision system, which makesthe cash dividend of listed companies in China have the following characteristics, forinstance, low level of cash dividend distribution, low distribution rate of cash dividend,common phenomenon of paying no dividend and so on. The majority of minorityshareholders can only get price gap profits by buying and selling stocks in the secondarymarket. It is difficult for minority shareholders to make profit because of the uncertaintyand risk of stock market as well as the high volatility of share price. In addition, the stockmarket exists many harmful activities such as large shareholders occupy the capital oflisted company, related transactions, false financial statement and so on, which greatlydamage the interestss of minority shareholders. Nowadays, the total financing and marketcapitalization of listed companies have increased dramatically. However, a large number ofminority investor can not actually share the fruits of growth and development of listedcompany.Therefore, it has extraordinary practical significance to have a research on theprotection of minority shareholders’ interests.Protection of investors’ interests is a compound concept which includes many aspects.Most foreign scholars adopt the method of LLSV. It makes a multi-national comparison ormakes a cross-staged research from the legislation and execution efficiency. But it doesnot apply to the research on the protection of minority shareholders’ interests amongdifferent listed companies in a single country. This paper tries to make a research on thethe protection of minority shareholders’ interests among different listed companies in thesame system on the micro aspect.In accordance with the ideas mentioned above, this paper firstly analysed the currentsituation of cash dividend distribution in China and the performance of minority shareholders when their interests are infringed. Secondly, it redefines the protect ofminority shareholders’ interests from the viewpoint of micro corporation organization, aswell as taking the implementation of system into account. This paper also chooses right toknow, the controlling shareholder’s behaviour, the quality of managing, return oninvestment and the integrity of company to construct the index of minority investors’interests protection. This thesis selects the all-circulation A share from2008to2010instock markets of Shanghai and Shenzhen as a sample, employs the following methodssuch as statistical description, comparative analysis, regression analysis, etc. to study theimpact of cash dividends payment of listed companies to the interests of minorityshareholders protection index and draws such conclusions:(1) The protection of minorityshareholders’ interests in listed companies who pay dividends is prominently higher thanthat in listed companies who pay no dividends. The distribution of cash dividends isconducive to the protection of minority shareholders’ interests. However, the vicious cashdividends and micro dividend behavior are bad for the protection of minority shareholders’interests.(2) It has not been proved that the cash dividends for the purpose of financingweakens the positive protection effect brought by the cash dividends. But it verifies thatrefinance is the main motivation for listed company to conduct excessive dividends.(3) Inthose widely held listed company, the cash dividend payment rate is positively correlatedwith the protection of minority shareholders’ interests in level5%. And the positive effectis significantly stronger than the full sample companies, which indicates that thedistribution of cash dividends of widely held listed company has stronger positive effecton the protection of minority shareholders’ interests.(4) The index between the cashdividend payment rate and the protection of minority shareholders’ interests is inverted Ucurve, namely the cash dividend payment level is low and the cash dividend payment rateis correlated with the protection of minority shareholders’ interests. However, with thedividend payout rate increases, there may be a hollowed behaviour by using thedistribution of cash dividends when the dividend of listed companies is over a certain"degree".The main innovations of this paper lie in:(1) This paper chooses right to know, the controlling shareholder’s behaviour, the quality of managing, return on investment and theintegrity of company to construct the composite indicator of minority investors’ interestsprotection, adopts expert survey scoring methods to determine the weights of the indicatorsin the index of investors’interests protection, and then calculates the index of minorityshareholders’ interests protection of listed companies.(2) This thesis studies the degree ofthe minority shareholders’ interests protection of different listed companies in a singlecountry from the perspective of cash dividend payment, which is different from the pastscholars’ research based on the research of equity structure or the system of macro level.(3)This paper divides listed companies into two sample groups--micro receive dividend andexcessive receive dividend. It analyses the level of minority shareholders’ interestsprotection of listed companies which have different cash dividend in China byclassification research and contrast research.