The Characteristics Of The Ultimate Controller, Cash Dividend Policy And Insufficient Company Investment

The goal of modern company management is maximization of company value.In the process of maximizing company's value,investment decision has played an extremely important role,and is closely related to the maximum value of company.Cash dividend policy,as another important part of the company's financial management,is inextricably linked to investment decisions.Ultimate controllers have been generally presented in Chinese listed companies,and their impact on the interaction of two important company's financial decisions is the focus of this study.This paper categorizes the ultimate controller's characteristics to help understand why different ultimate controllers will make different cash dividend policy,and also better analyze the incentives of listed company's dividend policy,so as to clarify the role of the ultimate controllers in the interplay between dividend decision and investment decision.This paper takes the data from 2012 to 2016 of listed companies in Shanghai and Shenzhen Stock Exchanges as research samples,conducts theoretical analysis and empirical tests,and finds that: Firstly,it has been verified by Logistic regression and multiple linear regression models that the economic nature and the degree of deviation of ownership from control right of the ultimate controller have a significant impact on the cash dividend policy of listed companies.Among them,the state-owned companies have a lower propensity and intensity in allocating cash dividends than the privately-controlled ones.The greater the degree of deviation of ownership from control right in the ultimate controller,the lower the tendency of the company's dividend distribution.Secondly,using Richardson's(2006)model to calculate the company's investment efficiency,we get the regression results of the expected investment of the sample company,and then group the sample companies according to the criteria of underinvestment and tight free cash flow.Through a multiple linear regression model,it was verified that when there is a gap in the free cash flow of the listed company,the underinvestment will be more serious.At this time,if the company chooses dividends,it willincrease the level of underinvestment.Finally,according to the characteristics of the ultimate controller,the multiple linear regression method is also used to verify that privately-controlled companies are more inclined to allocate cash dividends than state-controlled ones,which will significantly increase the underinvestment caused by the shortage of cash flow;The lower the degree of deviation of ownership from control right,the lower the distribution of cash dividends,and will also significantly increase the underinvestment caused by the tight cash flow.From the perspective of the ultimate controller,this paper studies the impact of the ultimate controller's characteristics on the relationship between cash dividend policy and the investment of listed companies.Recognizing the relevant influencing factors of the company's investment decision has very important practical significance for guiding the company to carry out investment projects with development prospects and high profitability,also increase investment efficiency and enhance company value.Through theoretical analysis and hypothesis testing,this paper clarifies the internal mechanism of the interaction between the ultimate controller's characteristics,dividend distribution,free cash flow,and corporate underinvestment.This will further improve the listed company's investment efficiency and corporate value,and has an important reference for improving Chinese listed companies' distribution system,corporate governance.