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Research On The Impact Of Cash Dividends On Excessive Investment And Financing Constraints

Posted on:2017-04-23Degree:MasterType:Thesis
Country:ChinaCandidate:H Z ZhangFull Text:PDF
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Investment decisions, financing decisions and dividend decisions constitute the main content of the financial decisions. The excessive investment, financing constraints and cash dividend policies that companies face correspond to investment activities, financing activities and distribution activities in the financial management activities of enterprises. For a long time, scholars at home and abroad conducted in-depth research for the three activities, but nearly all the researches were relatively independent. This paper associates the three activities through dividend policy, which has important significance for researching the relationship between cash dividend policies, excessive investment and financing constraints.With the aid of MM theory, asymmetric information theory (adverse selection and moral hazard), this paper analyzes the causes of financing constraints and excessive investment of the listed companies in our country. With the help of dividend signaling theory, agency cost theory and catering theory of dividend, this paper analyzes the influence of the cash dividend policy on excessive investment and financing constraints. It describes the present situation of investment, the present situation of financing and the background of the cash dividend policy. And it makes studying the effects of cash dividend on investment and financing having more practical significance combined with the cash dividend policy the Securities and Futures Commission continuously introduced which is associated with refinancing of listed companies after 2008. Based on the sample data of a-share listed companies of stock markets of Shanghai and Shenzhen from 2010 to 2014, this article empirically analysis the existence of excessive investment and financing constraints of listed companies in our country, and the effect of cash dividend policy on the other two(excessive investment and financing constraints). The empirical results show that:(1)The state holding listed companies and the non-state-owned listed companies which has more free cash flow in China shows obvious problem of excessive investment, and delivery excessive levels of the former is higher than that of the latter ones;(2) The non-state-owned listed companies which is lack of free cash flow in China shows obviously problem of financing constraints;(3) Distributing cash dividends has played a significant role in alleviating over-investment problem of the non-state-owned listed companies which has more free cash flow in our country, but has not played a important role in alleviating over-investment problem of the state-owned listed companies;(4) Distributing cash dividend has not played a significant role in alleviating financing constraint problems of the non-state-owned listed companies which is lack of free cash flow in our country. On the above conclusions, this paper puts forward the corresponding Suggestions respectively aiming at enterprise level and the national policy level, such as encouraging listed companies using debt financing to finance, and encouraging the stock markets of Shanghai and Shenzhen making different cash dividend policy aiming at different companies, etc.The contribution of this article lies in that it establishes an analysis framework of studying the relationship between the cash dividend and financing constraints and between excessive investment. The framework shows the impact mechanism that how cash dividends influence the financing constraints and the excessive investment separately. Based on the investment-cash flow sensitivity model of Vogt (1994) and model of Tang Xuesong (2007), this article uses the growth index which is suitable for China market, and classifies the data into two samples- "the state-owned listed companies "and "the non-state-owned listed companies "according to the nature of the company.And classifies the data into three samples -"group of high free cash flow"," group of centered free cash flow", and "group of low free cash flow" according to the amount of cash flow that listed companies have, so that we can study the characteristics of listed companies more and more refined.
Keywords/Search Tags:Excessive Investment, Financing Constraints, Cash Dividend, Investment-Cash Flow Sensitivity
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