Research On The Relationship Between Corporate Social Responsibility And Cash Dividend Policy

Dividend policy is the classic topic in the field of financial studies, and has becomeone of the “top ten unsolved financial issues" for more than half a century. The Lintnermodel and dividend irrelevance theory based on perfect capital market assumptionsopened the beginning of dividend researches. Thereafter scholars began to expanddividend irrelevance theory hypotheses. Different theories came into being: taxdifferential theory, customer effect theory, signaling theory, agency cost theory, life cycletheory, behavioral theory, etc.. They did a lot of empirical researches and tried to identifythe influential factors of the dividend policy for a wide range, such as the company’sfinancial characteristics, growth ability, ownership structure, product market and legalenvironment and so on. Cash dividend is the most common forms of dividend, andcurrent research on cash dividend is from the economics point of view. There is aprominent problem in those researches, which is they ignore the interaction betweencompany and its environment. In order to completely understand social and economicphenomenon, and make an extension and supplement of mainstream finance studies, thisthesis do research on the relationship between corporate social responsibility(CSR) andthe cash dividend distribution from the angle of " Corporate economic behavior isembedded in structures of social relations ".In China the capital market is immature, soenhancing corporate social responsibility provides a new perspective to solve the problemof the low cash dividend by listed company.First, we comb dividend theory and its influencing factors, and review literatureabout social factors impacting on enterprise financial activity. We find that few researcheson dividend distribution policy are from the perspective of social norms. Second, weintroduce the institutional background and situation of cash dividends on the capitalmarket in China, and summarize theoretical foundation of the social norm influencingenterprise financial activities. Then we analyze the relationship between corporate socialresponsibility and financial behavior, and put forward empirical assumptions.After that,this paper investigates the relationship between CSR and cash dividend policy, using dataof China’s A-share listed companies from2007to2011, and using enterprise’s donation(whether donations, absolute and relative donations) as the representative of the degree ofCSR. This paper shows that enterprise with highly CSR tends to pay more cash dividendto its shareholders. Finally, on the basis of the basic model we investigate how the factors influence the sensitivity of the positive relationship between cash dividend and corporatedonation. These factors refer to the company’s ownership and region. Empirical resultssuggest that, the sensitivity is stronger in those companies which are controlled bygovernment and in developed region.