Internal Control,Free Cash Flow And Cash Dividends

Cash dividend policy,as one of the three major decisions of enterprises,has attracted much attention of researchers.The phenomenon of "dividend disappearance" provides a new direction for the study of cash dividend policy.Scholars at home and abroad have been trying to find out the reasons why cash dividends are decreasing year by year from different perspectives,but the phenomenon of "dividend disappearance" has not been solved yet.At present,listed companies are reluctant to pay cash dividends,and the level of cash dividends in the securities market is very low,the sustainability is poor and unstable.China has introduced a series of measures to rectify the market,adjust the status quo of cash dividends issued by listed companies,and closely link the cash dividend policy with enterprise refinancing.With the steady implementation of various dividend rectification measures,the dividend distribution situation of listed companies has been continuously improved.This paper reviews the literature on cash dividend policy,internal control quality and free cash flow at home and abroad,and concludes that there is a close relationship between the quality of internal control and cash dividend policy of listed companies.The amount of free cash flow will also affect cash dividend policy,and adjust the relationship between the quality of internal control and cash dividend distribution rate.Based on the above analysis,this paper takes A-share listed companies from 2012 to 2017 as the research object,to verify the relationship between the internal control quality of listed companies and the cash dividend distribution rate of free cash flow.Empirical tests show that: The higher the quality of internal control,the more willing listed companies are to distribute cash dividends,and the more free cash flow,the better the cash dividend distribution.Free cash flow will regulate the relationship between the quality of internal control and cash dividend distribution rate,and restrain the sensitivity of internal control to cash dividend.This phenomenon is common in state-owned enterprises.This is related to the fact that state-owned enterprises are guaranteed by their national reputation,that companies with sufficient free cash flow pass on to the outside world the full use of funds,that management overinvestment or on-the-job consumption are reduced,that investors are more recognized,and that they are willing to make long-term investments.At the same time,this paper finds that cash dividend distribution is also related to enterprise size,the largest shareholders' shareholding,asset-liability ratio,investment expenditure and so on.Finally,based on the conclusions of the study,this paper puts forward some suggestions on relevant policies and securities markets.