Study On The Impact Of Managerial Incentives On Dividend Policy

In this paper, we focus on the dividend policy decision-making of listed companies. Based on the theoretical basis of the principal-agent theory, the residual rights of control theory, we examine the relationship between the managerial incentives and dividend policy from the perspective of improving corporate governance efficiency and reducing agency costs, and aim to improve dividend policy management of listed companies.By incorporating the internal incentives and external incentives into an analysis framework, this paper investigates the influence mechanism of internal and external incentives on dividend policy of listed companies, and put forward the hypothesis. Then, with China’s manufacturing industry listed companies as samples, we make an empirical study of the impact of internal and external incentives on dividend policy; furthermore, we reveal the industry differences of the relationship between managerial incentives and dividend policy. The results show that:(1) For the managerial internal incentives, the role of salary incentives is small, the stock incentives play the most significant role in dividend policies, while the control rights incentives also show the positive effects;(2) For managerial external incentives, the pressure from capital market has positive effect on listed companies’dividend policies, however, the pressure from product market has significant negative effect.(3) There are industry differences of the relationship between managerial incentives and dividend policy. Specifically, in the high-tech industries, both the internal incentives and external incentives have significant effects, especially the external incentives; while in the low-tech industries, the internal incentives mainly play a role. According to the above, we give some suggestions on how to improve china’s listed company’s dividend policy.