Equity Concentration,Management Shareholding Ratio And Cash Dividend Policy

Dividend policy is an important part of corporate financial decision-making,an important way for a company to show its operating results and development prospects and feedback shareholders.It is also the main channel for investors to make profits.Due to information asymmetry,company managers have more internal information of the company than shareholders.Well-run companies can attract investors through cash dividends.Therefore,cash dividend policy is also considered as an important way to convey internal information of the company and help investors distinguish between good companies and bad companies.The formulation of dividend policy is influenced by many factors.Domestic and foreign scholars have found that there is a correlation between equity concentration and cash dividend payment level.The management shareholding ratio also has a significant impact on the level of cash dividend payment.But domestic and foreign scholars have different opinions on whether the correlation is positive,negative or “U” shaped.For the signaling effect of cash dividend policy,the literature has also studied from multiple angles such as excess return rate.It is generally considered that the cash dividend policy in Chinese market has a significant signaling effect.In fact,equity concentration and management shareholding ratio are indicators that reflect the company’s shareholding structure and the relationship between “trust-agent”.The two will influence each other and check and balance each other to determine the company’s cash dividend policy.There is little research on the influence of equity concentration and management shareholding to affect the cash dividend payment level.In addition,because the interests of shareholders and management are not completely consistent,the cash dividend policy may become a tool to encroach on the company’s interests and have the problem of reflecting the information of the company’s business development and other aspects imprecisely,which may affecting the signaling effect.Scholars also have not considered the impact of equity concentration and management shareholding on the transmission effect of the cash dividend policy.Based on the previous researches,this paper studies the joint influence of the equity concentration and the management shareholding ratio on the cash dividend payment level.Through research,it finds that the equity concentration,management shareholding ratio and cash level of dividend payment is positively correlated.On this basis,the sample is divided into 13 sample groups based on the degree of equity concentration and management shareholding ratio.The cumulative excess return performance of different sample groups on the 20 trading days before and after the dividend announcement date is studied.It is found that the signaling effect is generally weak,and the signal transfer effect of the company’s cash dividend policy is significantly different for the groups of different equity concentration and management shareholding ratio.Finally,based on the research conclusions,suggestions and references for regulators,listed companies and investors are provided.