Managerial Power And Cash Dividend Policy

The typical characteristic of modern enterprises is the separation of the twopowers, resulting in a principal-agent relationship, which led to the game between thelayer and the shareholders, creditors and management of stakeholders. As the limitedrational economic man, the management not to the shareholder wealth maximizationas the goal, and to maximize their own utility purpose. The existence of informationasymmetry makes the management holds more than investors rich and overallinformation, the management will use their information advantage to make the mostfavorable to their own financial decision. Power represents the ability of themanagement in the implementation of their own will, to make the managementbehavior of strength and could have important implications. The enterprise reform ofour country always along the decentralization leads to promote, with the deepening ofmarket-oriented reform, executives of state-owned enterprises gradually gainedautonomy in production and management, including investment, financing and otheraspects, executive power is increasing. In non-state enterprises, executives typicallyserved by non-state shareholders or their family members, which makes the non state-owned enterprise executives natural has enormous power. Cash dividend policydirectly affect the choice of the management of cash holding level, as the most liquidassets in cash is the priority among priorities chase for the self-serving ofmanagement. Therefore, there is affecting the choice of management power of thesize of the cash dividend policy, in order to explore the relationship of managerialpower and cash dividend policy, based on the2006-2010of China’s Shanghai andShenzhen A shares of listing Corporation data, an empirical test of the relationshipbetween the management authority and the cash dividend policy, and the relationshipbetween the management authority and the cash dividend policy in different growth,the nature of property rights, marketization.The study found:(1) the management more power, listing Corporation,probability level of cash dividend payment is low.(2) along with the growth of theincrease, a negative correlation between the managerial power and the cash dividendpayment probability will be reduced.(3) the management more power, less than thestate-owned title company to pay cash dividends of state-owned Title company.(4) along with the market advancement, negative correlation between managerial poweron cash dividend policy is restricted, and the restriction role in non state-owned titlecompany more significant.Based on the empirical study, in order to restrict the negative correlation ofmanagerial power and cash dividend policy, the paper proposes the following policyrecommendations: first, countries should strengthen market supervision, improve theinformation disclosure level, reduce the information asymmetry lead to the possibilityof management’s use of power rent-seeking； second, should the listing Corporationbonus system arrangement to rise to the level of law you can specify the listingCorporation, undistributed profits per share reached a certain amount must pay acertain percentage of the cash dividend to shareholders, or on the fails to reach theprescribed proportion of net profit to impose tax. Third, speed up the process ofmarketization, in order to reduce administrative intervention by the government andimprove the legal level. Optimization of the structure of enterprise property rights andaccelerate the adjustment of state-owned economy, for the growth of differententerprises should adopt different legal policy, to prevent the management of lowgrowth of enterprises use the power to choose the cash dividend policy have damageto the interests of the investors.