Research On The Relationship Between Internal Control Quality, Cash Dividend And Agency Cost

With the continuous development of modern corporate enterprises, the separation of ownership, information asymmetry and other factors led directly to the enterprise management to run the vast majority of the information, and business owners is at a disadvantage to obtain information. For this reason, the company’s proxy issues become more prominent, both first class agency problems between managers and owners, or second class agency problem between large shareholders and minority shareholders, have always been the Corporate Governance hot spots.Reduce agency costs from the perspective of internal control and cash dividend will reduce agency costs play a role to some extent, be controlled by the internal oversight and constraints on the behavior of the agent, the cash dividend is controlled by reducing agents free cash flow, to alleviate the agency problem of purpose, but the effect of these two mechanisms in solving problems arising from the different types of agents are different, this article will focus on internal controls were studied and cash dividend policy for which the agency problem in outstanding governance effect, and research in reducing agency costs in the process, how about the relationship between the two mechanisms. In this paper, 2008-2012 China’s listed companies is based on empirical data, will be interpreted as a proxy variable costs divided owners and managers, and agency costs large shareholders and minority shareholders, and the use of principal component analysis method to generate the internal control quality evaluation index were studied and analyzed the impact of internal control and cash dividend policy on corporate proxy issues, as well as internal control and dividend policy on the relationship between these two mechanisms to alleviate the agency problem, and to provide new ideas and methods to solve the problems of the company proxy.The results show that in China’s capital market, the quality of internal control and cash dividend policy are two types of agents can alleviate the problem of enterprises, but the extent of two types of agents for alleviating the problem is different, the level of quality of internal control and management to solve the owner agency problem between the have a significant impact, but then how many large shareholders and minority shareholders alleviate agency problems more obvious cash dividend. At the same time, the study found business agent in alleviating the problem, the level of quality of internal control and payment of cash dividends positively correlated, that there is no substitution effect between the two. Therefore, this paper argues for a different agency problems exist in different companies, you can take a more targeted control measures, for the first category of serious agency problems the company should focus on the importance of internal controls, improve internal quality levels; for the second class of agents Companies should focus on issues outstanding implement cash dividend policy to increase the level of cash dividend, if such dividends willingness strong enough or conditions are not ripe, they can cash dividend is based on the results of internal control, by strengthening internal controls to promote cash dividend payment.