A Study Of The Effect Of Ownership Structure On The Cash Dividend Policy

As one of the three most important financial decisions, listed companies’ dividend policy, which has been caused for concern, is not only a hot topic of theoretical research of company finance, but also an important issue of corporate finance practice. Cash dividend policy is a normal decision-making behavior of the company’s management.Its formulation need to make a balance between shareholders’ return, company’s future development, investment and financing plan, and capital structure. Therefore, cash dividend policy is difficult to solve. Taking a relatively reasonable cash dividend distribution policy will help the company establish a good external image, so they have more passion for the company continued to expand investment, thus promoting the company develop rapidly and steadily.Power industry has its unique characteristic that the ownership structure is relatively concentrated. Therefore study how ownership structure influence power industry company’s cash dividend policy has important practical significance. In this paper, Firstly, we summed up the researched about the impact factors of the cash dividend policy and the relationship between ownership structure and cash dividend policy of listed companies of the power industry. Secondly, taking the followers theory,signaling theory and agency theory as the theoretical basis, based on the unique characteristics and special nature of the equity structure of our power industry, building a role model of ownership structure on the cash dividend policy to study the impact of ownership structure on cash dividend policy. Finally, we come to the conclusion as following:(1)in the listed companies of power industry, the higher proportion of state-owned shares, the higher probability of distribution of cash dividends, and cash dividend distribution level is higher at the same time.(2) When the largest shareholder of listed companies in power industry are the state-owned shares, the company will increase the probability of a cash dividend.(3)In the listed companies of power industry,the higher proportion of corporate shares, the lower cash dividend level will be.(4) In the listed companies of power industry, the higher concentration of ownership, the higher cash dividend levels will be.(5)when the state-owned shares ratio is high, then it is more inclined to choose the cash dividend.(6) The larger asset size the listedcompany has, the bigger probabilityof cash dividends distribution will be. At last, this paper presents a reasonable policy suggestions: It is necessary to implement the equity reform, strict the regulatory constraints for the shareholders, and further strengthen the disclosure system.The innovation point of this paper is mainly manifested in two aspects: First, do the detailed research of how ownership structure influence cash dividend policy.Domestic and foreign scholars ownership structure and the relationship between cash dividend policy research rarely to specific industries, the majority in all sectors as a research object, and then concluded that general sense. In this paper, the power industry as an object of analysis, and adds a wealth of research in this area. Second, introduce a new research index–the Herfindahl Index in the model. It played a better measure of the concentration of ownership changes. And it provided a more accurate basis for the empirical study.