Study On The Correlation Between Cash Dividend And Investment Efficiency Of Manufacturing Listed Companies

Financial management of listed companies include the following three modules, investment, financing and distribution, among which investment affect not only a company’s cash flow and profit margin, but also its distribution and financing. In the current period, the investment efficiency of listed companies in our country is generally low, and some even expand their investment scale blindly and invest overly, affecting greatly their cash liquidity and increasing their financial risk; others, however, are so cautious that they give up many high-quality investment projects, idle funds and increase financial cost, which is negative for the promotion of profitability. The unreasonable investment of listed companies is bound to damage the growing value of companies and the interests of investors as well. According to the dividend agency theory, cash dividend allocation will help to ease the agency conflict and improve investment efficiency. Along with the increasingly improved regulatory policies about capital market, dividend distribution of listed companies in China is more standard, and the allocation rate of cash dividend is much increased. Therefore, this thesis, from the perspective of free cash flow, is to research the influence of cash dividend policies on investment efficiency in manufacturing listed companies.The thesis first summarizes the existing domestic and international studies on cash dividend and investment efficiency, then analyzes the present situation and reasons of policy choices and investment activities of China’s manufacturing listed companies, and puts forward a research hypothesis that cash dividend policies of China’s manufacturing industry have a governance role in inefficient investment, with fluctuating degree in different equity structures. In the empirical study, by selecting the 2010-2014 financial statement data of 732 A-share manufacturing listed companies in Shanghai and Shenzhen Stock Market as the research samples, measuring the investment efficiency of these companies through the expected investment efficiency model, and grouping these samples in terms of the free cash flow and investment efficiency, the thesis studies the correlation between cash dividend and investment efficiency of the sub-samples, and also analyses the influence of different equity structures on cash dividend policies and investment efficiency.The results shows that free cash flow will influence the investment efficiency of listed companies, while cash dividend policies have a governance effect on inefficient investment by influencing the free cash flow; and the effect will be more significant in listed companies of check-and-balance equity structure compared with that of highly concentrated equity or highly decentralized equity; and this is also true for non-state-owned listed companies compared with that of state-owned. Based on the research conclusions above, the thesis gives some advice about making cash dividend policies and improving investment efficiency. In addition, the thesis also analyzes the shortcomings existed in this research and looks forward to the future research directions of cash dividend policies and investment efficiency in order to provide references for researches later.