How Controlling Shareholder Affect Cash Dividend Policy: Evidence From China

Scholars at home and abroad are always paying attention to the research of cash dividendpolicy. Nowadays, in domestic security market, the problem that some listed companies do notdistribute dividend or tiny dividend, or do not have a stable dividend policy is quite serious. Ascompany’s actual controller, the controlling shareholder is the maker of financial policy, itinfluence company’s final dividend policy greatly. This article is aim to analyze how thecontrolling shareholder influence dividend policy, so that we could offer the theoretical andempirical evidence about dividend policy, optimize share-holding structure and defend mediumand small investors’ interest.The article firstly reviews the classic dividend theories, makes a summary of relatedresearch, and defines the controlling shareholding form the view of actual controller. Thenanalyze how the economic nature、separation of cash right and control right、control proportioninfluence dividend policy, and put forward the research assumptions basis on the analysis. Inempirical research, the article use578listed companies in China between2007-2011as panelstat, with method of logit and regress model, we test the propensity and dividend rate of thesample companies. The test results shows that: state nature company has lower distributepropensity and paid rate than non-state company, the higher separation rate, the less propensityand paid rate. However, once the proportion has reached a certain level, the paid rate will declinewith the proportion continue to increase, as the shape of inverted U. At the end of article, thearticle propose some suggestions to correct the cash dividend policy.