Cash Dividend Stability, Free Cash Flow And Corporate Investment Efficiency

The investment problems of listed companies have always been the focus of academic research on corporate finance.Ideally,a company's investment decisions depend only on growth opportunities and are independent of other factors such as free cash flow.Under imperfect market conditions,corporate investment can be constrained by free cash flow.In China's realistic capital market environment,due to the prominent information asymmetry between the interior and exterior of the company,the moral hazard problem and the widespread adverse selection in the market,the investment is confronted with many uncertainties,and the non-efficiency investment(over-investment or under-investment)problem is serious.According to the theory of dividend agency cost and dividend signal transmission theory,the company's distribution of cash dividends is conducive to alleviate the problem of non-efficiency investment.At present,most of the research on the relationship between dividend policy and corporate investment is based on the type of dividend policy,the distribution of dividends and the impact of dividend distribution on corporate investment,while the issue of dividend stability is less concerned.It not only helps to alleviate internal agency conflicts,but also conveys internal information of investors to investors and reduces information asymmetry.Since 2001,in order to regulate the cash dividend decision-making behavior of listed companies,the China Securities Regulatory Commission has issued a series of regulatory policies,and adopted a regulatory measure that gradually converted from“laissez-faire” to “semi-mandatory dividends” and “mandatory dividends”.Moreover,the cash dividend is one of the conditions for the refinancing of listed companies,whose purpose is to protect the interests of small and medium investors and ensure the continuity and stability of the income.The stability of cash dividends has become one of the important contents of the reform and improvement of the supervision system of listed companies by the China Securities Regulatory Commission,and has received extensive attention from the academic and practical circles.The stability of cash dividends is of great significance to promote the healthy development of capital markets and the protection of small and medium-sized investors.It is worthy of in-depth discussion and research.Based on this,this paper attempts to put the cash dividend stability,free cash flow and enterprise investment efficiency into a unified example from the perspective of cash dividend stability,based on the relevant financial data of China's capital market A-share listed companies from 2007 to 2017.In the research model,the method of multiple regression analysis is used to empirically study the impact of cash dividend stability on corporate investment efficiency,and the impact of cash dividend stability on corporate investment efficiency under the difference of property rights.The research results show that in the current capital market environment in China:(1)the more likely the over-investment of listed companies with surplus free cash flow,the greater possibility of under-investment in listed companies with limited free cash flow.(2)To a certain extent stable cash dividends have alleviated the problem of agency conflicts of free cash flow surplus companies,and have inhibited the excessive investment behavior of such companies.However,the signal transmission effect of cash dividends has not been effectively played.The stable distribution has resulted in more shortage of cash flow of the company with insufficient free cash flow,and the problem of insufficient investment is more serious.(3)In terms of the governance role of cash dividend stability,the impact of cash dividend stability on non-state-owned holding companies on the relationship between free cash flow and corporate investment efficiency is significantly higher than that of state-owned holding companies.Finally,based on the above research results,this paper proposes relevant policy recommendations in a targeted manner,in order to provide some reference and thinking for regulating the investment behavior of listed companies.