Family Control, Board Governance And Cash Dividend Policy

With the dominant position and role of family business in world and China economy, family business has become a resilient business model for the 21st century. But, Because of the practical dilemma about financing constraints and the theoretical dilemma about scant attention of scholars, the development of family business in China has been restricted unmatchedly. This paper focuses whether and how family control could influence on cash dividend policy of listed companies. Because until family business could build investor confidence and market trust with positive cash dividend policy, it could relieve financing constraints. Moreover, this paper concentrates whether and how board governance could influence cash dividend policy of listed family companies. Because the goal of board governance is to protect the interests of all investors, high-level board governance could urge family business to pay more cash dividend.This paper is based on this logical framework:"background analysis— literature review——theory analysis——-empirical analysis——conclusion and implication". In introduction part, this paper introduces the background and value of research and reviews the literature on dividend policy, family control and board governance on basis of agency theory. In theory part, this paper talks on the definition and the theory of family business, dividend policy under agency conflict, dividend policy in family control and the impact of board governance to dividend policy in family control. In empirical analysis part, firstly, this paper collects the data of 2008-2012 Chinese listed companies as sample, employs PCA method to build a B-index and uses descriptive analysis, correlation analysis and regression analysis to examine six hypotheses. In last part, according to the conclusion, this paper makes implications on the development, the dividend policy and the board governance of family business.The main conclusions of this paper include:Firstly, it is more and more important of Chinese family business in capital market, economy and research sphere; Secondly, comparing to the non-family listed companies, family listed companies have relatively passive cash dividend policy; Thirdly, family control exacerbates agency conflict I, and then it results in relatively passive cash dividend policy; Fourthly, high-level board governance could prompt family listed companies to pay more cash dividend; Fifthly, because board governance relieve the agency conflict I, family listed companies could pay more cash dividend. The conclusion of this paper could contribute to help government, regulators and entrepreneurs develop targeted measures to improve board governance and cash dividend policy of family business.