External Governance Environment, The Controlling Shareholder Equity Pledge And The Cash Dividend Policy

In recent years, with the further perfection and development of chinese capital market, equity pledge as a new secured financing became active in the capital market in our country. On the one hand,It is helpful to expanding the financing channels. On the other hand, the essence of the equity pledge mark involves the property right of the pledge of equity.The pledged equity still has control of the pledgor, resulting in the stake "cash flow rights" and "control" phase separation, creating agency problem between controlling shareholders and minority shareholders. But cash dividend policy can effectively alleviate the agency problem. In the case that the behavior of the controlling shareholder equity pledge aggravated separation of two rights degree, whether it will lead to the controlling shareholders in order to gain to take less fat or non-cash dividend of decision? The improvement of the external governance environment can be effectively constrained the agency problem caused by the separation of two rights, whether it will inhibit negative correlation between controlling shareholders equity pledge and the cash dividend policy?Based on the data in2007-2012A shares listed companies in Shanghai and shenzheng, and large shareholders equity pledge company for the study of the initial sample.Based on the principal-agent theory Angle of view, combining normative research and empirical research on the controlling shareholders equity pledge and the external governance environment these two types of variables study the effect of cash dividend policy, and by joining by item, to examine the improvement of the external governance environment can improve the controlling shareholder equity pledge the negative effect on the cash dividend policy, opens a new perspective up for the cash dividend policy research.The results of this article mainly has the following aspects:firstly, through group Logit, tobit regression and single variable inspection, we found that the controlling shareholders equity pledge will reduce the level of cash dividend payment willingness and cash dividend payment. Controlling shareholders through the pledge loan achieved its partial or full rights to the company’s cash. They will not affect the shareholders for control of the company.This may lead to serious agency problem between controlling shareholders and minority shareholders, increase the controlling shareholder control using surplus cash for selfish motives. In addition, cash flow right of controlling shareholders will be limited after the equity pledge.The controlling shareholders cannot get mutual benefits from the issuance of cash dividend. The controlling shareholder will be more inclined to leave the cash in the company and have the high proportion of control to control this portion of the cash resources in order to get control of self-interest. Secondly, by adding cross multiply regression results, we found that the improvement of the governance environment help ease the controlling shareholder equity pledge to intend the negative effect of cash dividend payments.Marketization brings the development of financial markets. Financing convenience reduce the reliance on internal funds.The improvement of the rule of law make the legal environment protect investors center, so that the marginal cost the controlling shareholders encroach on the behavior is greater. Reduction of government intervention make the goal of state-owned listed companies more simple and clear, improve the efficiency, improve the administrative efficiency, and reduce the pressure of retaining profits. The development of these external governance environment factors help to limit the behavior of the controlling shareholder by using surplus cash to damage the shareholders at the centre of the behavior.lt can help improve the grant wishes and level of cash dividend.