Research On The Cash Dividend Distribution Of Listed Company Under Financing Constraints

Financing policy and dividend policy are the important content of the modern corporate financial decisions, and financing constraints belongs to the category of financing policy while cash dividend is the main form of dividend policy. The interaction of them in the modern corporate financial system is an essential problem to adequately measure and consider when company managers and shareholders make decisions. The imperfection of capital market, resulting in asymmetric information transfer, will bring that the agency cost resulted from the company's external financing is greater than the cost of internal funds, which indicates that the companies are facing financing constraints. The existence of financing constraints leads the company to select the internal financing channels initially in the need of financing, which will affect the company's cash dividend distribution. Due to the existence of adverse selection, the reduction of the company's cash dividend strengthens further the agency cost of the information asymmetry, which leads to the dilemma that the company how to balance the financing constraints and the cash dividend. Therefore, there must be some significant endogenous characteristics between the financing constraints and the implementation of the cash dividend distribution policy. To explore the impact of financing constraints on the cash dividend policy is not only helpful for the listed companies to make the correct management decisions, but also it can help the market managers to carry out effective policy guidance. Domestic and foreign scholars have studied the financing constraints and cash dividends, both of them, however, almost focus on the separate discussion of the two aspects. On the one hand, the research on dividend policy is mainly reflected on the impact of the enterprise life cycle and the ownership structure, but few scholars pay close attention to the impact of financing constraints on the dividend payout, and the several studies also lacks quantitative results and more detailed analysis; on the other hand, the previous studies about the impact of financing constraints mainly focus on the enterprise financial decisions, cash dividend payment usually regarded only as an indicator to distinguish corporate financing constraints, and it is rarely short of the researches of exploration that cash dividend distribution has the governance function from the point of corporate financing constraints.In this paper, we will discuss the cash dividend distribution behavior in detail from the perspective of financing constraints, and quantitatively describe the impact of financing constraints on corporate cash dividend distribution. This paper based on Almeida model attempts to construct one cash-cash flow model to measure the degree of financing constraints enterprises are facing, which avoids that the instability problem of single variable and multi variable index, the commonly used in the past researches, and overcomes the endogenous problem from the index based on the investment cash flow sensitivity. This paper chose 2009-2014 session sample of the Shanghai and Shenzhen listed companies, described the listed company's dividend payout behavior in detail, measured the degree of financing constraints faced by the different stages of listed companies through the construction of the model, cash--cash flow sensitivity, and observed the influence, financing constraints on cash dividend distribution of listed companies, according to company size, dividend payment and other indicators.It was found that there was a general financing constraint in listed companies in China, which showed that cash-cash flow sensitivity was positive, and the non-dividend enterprises were more serious than the dividend enterprises. Dividend payout level improved financing constraints better in the corporate that has a favorable dividend pattern, and higher cash dividend distribution companies often face the lower financing constraints. As previous studies have not compared with the changes of the cash dividend policy about listed companies which have different financing constraints before or after the introduction of refinancing deal, the empirical part of this paper has been divided into two periods, from 2009 to 2011 and from 2012 to 2014, considering the introduction of the new refinancing deal as exogenous events that could make the listed companies financing constraints and dividend policy, to examine the impact of financing constraints on cash dividend distribution of listed companies. Finally, taking the listed companies on the Main Board as a sub-sample to test the robustness, the results still supported the conclusion of this paper.