Corporate Governance, Equity Incentive And Cash Dividend Policy

Principal-agent is the core problem in the governance of modern enterprises. Stock ownership incentive is one of the important solutions. In Europe and America mature capital market, listed companies have gained good effect by unifying targets of owners and management layer through stock ownership incentive. Along with the development and maturity, the encouragement of government regulation layer and the promotion of listed company internal governance demand, stock ownership incentive has been implemented by more and more listed companies year after year, which provides a powerful support for the development and perfection of domestic capital market. However, through deep research on stock ownership incentive cases of China’s listed companies, it finds that some problems exist in its issuing motivation, design and implementation process. There are also many cases about delivering benefit to management layers under the name of stock ownership incentive. The above problems have draw attention of academic circles. After research on these listed companies, scholars find that some stock ownership incentive plan, after its implementation, does not reach an agreement on the benefit between owners and administrators, but aggravate agency problem. The stock ownership incentive finally becomes a tool to seek benefit for administrators themselves. That is to say, stock ownership incentive will influence company’s financial decision-making. Cash dividends policy, one of three financial policies and a part of profit distribution decision, will also be influenced by stock ownership incentive. Agency cost theory of dividend well explains the reason why companies in mature market distribute cashing dividend stably. From company governance perspective, cash dividends will relieve agency conflicts between shareholders and management layers, as well as between strong holders and minority holders. Although the dividend distribution power is owned by general meeting of stockholders and board of directors in listed companies, management layer influence the distribution of dividends to some extent actually. Especially in China, one person with dual positions, board member hold a concurrent post of administrator, commonly happens here. This results in a situation that, the incentive object of stock ownership incentive is at the same time the maker of stock ownership incentive plan. Under this background, will management layer, the direct beneficiaries of stock ownership incentive, make relevant cash dividends policy to obtain largest return on equity? The implementation of stock ownership incentive is individual behavior of each listed company. Different characteristics of different listed companies will have different influence on stock ownership incentive and cash dividends policy. From company governance perspective(mainly refer to power of management layer in this paper), will the power of management layer further influence cash dividend policy during the implementation of stock ownership incentive plan?The research process of this paper include: to begin with, the author teases relevant literatures. Firstly, the author clarifies the concepts of company governance, stock ownership incentive and cash dividend policy. Secondly, as to dividend incentive, the author clears up theory basic of management layer incentive, analyzes the necessity of incentive, and summarizes existing literatures about the influence of stock ownership incentive on dividend policy. Thirdly, as to cash dividend policy, this paper clears up relevant literatures from agency theory and non-agency theory. Fourthly, as to company governance, with the entry point of management layer, the author teases relevant literatures, and makes clear the important influence of management layer power on corporate governance. Fifthly, the author deduces the hypothesis and makes empirical analysis. This paper regards data of listed company from 2011 to 2013 as the sample, and combines principal-agent theory, enterprise theory and information asymmetry theory. With quantitative and qualitative research method, this paper studies the influence of stock incentive plan on cash dividend policy, analyzes companies real motivation to implement dividend distribution policy from company governance level. Finally, the author makes a conclusion. The first is to tease and summarize research conclusion of this paper. The second is to put forward targeted advices upon research conclusion, and provides positive reference for further implementation of stock incentive plan of enterprises and supervision departments. The third is to point out the deficiency of this paper, and specify the direction for follow-up study.The research conclusion of this paper is: firstly, this paper investigates the influence of stock incentive system on financial behavior, and finds that it is one of important factors which may influence dividend policy of listed companies. Some company management layers who implement stock incentive plan seek their own benefit by using of dividend policy. Secondly, the power of management layer is an important factor which may influence company to pay cash dividends. In listed companies who implement stock incentive, compared with those whose management layers are restrained, listed companies whose management layer without being restrained are more likely to pay cash dividends.