A Study On The Largest Shareholder’s Cash Dividends Occupational Behavior

Because of the many problems brought about by the continuous development of China’s capital market as well as the Equity Separation, The China Securities Regulatory Commission released "the Inform about Listed Companies Equity Separation Reform Issues" on April29,2005, it marked the launching of the Chinese capital market Equity Separation Reform’s pilot. The Equity Separation Reform is a major change in China’s capital market, It was bound to have a profound impact on ownership concentration, stock liquidity, equity balance degree of listed companies. The work of the Equity Separation Reform had been basically completed In June2007. With the gradual lifting of the non-tradable shares in restricted period, China’s stock market officially entered Full Circulation times in2011.Before the Equity Separation Reform, the largest shareholder is considerble big. Because their shares do not have the liquidity, so they can not enjoy the revenue sharing. To make up for this loss, major shareholders tend to obtain enough private benefits through using their control rights. The cash dividend is allocation of company’s remaining,. Shareholders are allocated in accordance with the stake, which seems to be a very fair account for interests. In fact, this logic implicit assumptions is inconsistent with reality. Because non-tradable shareholders’ acquisition costs is less than tradable shareholders,the non-tradable shareholders’ return rate is greater than tradable shareholders even on the payment of same cash dividends. From the view point of pursue maximum rate of return, the higher the proportion of shares held by the largest shareholder, the more the likely to distribute more cash dividends. Because the relevant national regulatory authorities strictly regulate the associated trading behavior of the controlling shareholder, it largely limits controlling shareholder despoiling the interest through associated trading behavior. Therefore, largest shareholders prefer to use cash dividends to implement the benefits transfer. In the full circulation times, non-tradable shares change into tradable shares. Logically, the interests of all shareholders has been become consistent, holding cost and investment income of all shareholders has also been become consistent. Whether the largest shareholders cash dividends occupation behavior can be effective to curb? What is changing about the affect ownership structure and governance structure have on cash dividends occupation behavior?These issues need to be deep research and analyze.This article not only referenced related theoretical research achievements at home and abroad but also combined with the actual situation of China’s capital market. It respectively regards the data in2004as the data before the Equity Separation Reform and regards the data in2011as the data In full circulation time to study the largest shareholder cash dividends occupational behavior.This paper has three innovations, as follows:Firstly, most research about largest shareholder expropriation behavior is based on the data before Equity Separation Reform carried out, this paper regards capital markets’full circulation time as the background, thus more representativeSecondly, most of the previous studies put data, before or after Equity Division Reform, together into regression analysis. But this paper put two years’ data separately into regression analysis,then analyze the regression’s results on contrastive point of view. It can be better examine the changes of the various explanatory variables in the regression model.Thirdly, this paper analyze the characteristics of the listed companies not only distributed cash dividends but also didn’t distribute cash dividends. It can be explain the reason of the largest shareholder implement cash dividends occupational behavior from another side.