Research On Managerial Ownership,Executive Compensation And Cash Dividends

Leadership and participation of managers play a vital role in most enterprises’ growth and development.Business practices from investments and operations to cash dividend distribution are affected and controlled by executives and managers.In order to improve the operation efficiency,enterprises optimize the organizational structure,among which the agency problem has been paid much attention to.Under the separation of the two rights(management and ownership),business owners seek to establish an efficient compensation contract to restrict the behavior of the executives.Managerial ownership and executive compensation also have an impact on the motivation and decisions of managers,and ultimately on enterprises themselves in the long run.Managerial ownership has an impact on cash dividends,an influence constrained by executive compensation,which in turn affects the relationship between managerial ownership and cash dividends.Each enterprise is in a certain life stage,and different life stages of enterprises will show different characteristics and status.Finances,interior and exterior environments,economic resources and so on are different between the mature and immature life stages.This will affect the management,operations and decisions of executives,thus affecting the relationships among managerial ownership,executive compensations and cash dividends.This paper collects data from 2013 to 2018 of A-share listed companies both in Shanghai and Shenzhen,selects cash dividends as the explanatory variable,and chooses managerial ownership as the explanatory variable to study the impact of policy managerial ownership on the cash dividends,and then to analyze whether managerial ownership has an impact on the relationship between executive compensations and cash dividends.According to cash flow of enterprises in different stages,companies’ life stages are simply divided into maturity and immaturity to compare the different relationships among executive compensation,managerial ownership and cash dividends.By applying the Tobit model,the research conclusions of this paper are as follows:(1)Compared with listed companies whose executives do not hold shares,the cash dividends of listed companies whose shares are held by executives are greater.At the same time,there is a significant positive correlation between the managerial ownership and cash dividends of China’s listed companies,that is,cash dividends increase with executives’ shareholdings.(2)Executive compensation has a negative effect on the relationship between managerial ownership and cash dividends,that is,when other conditions remain unchanged,the higher the executive compensation,the weaker the positive effect is.(3)Mature enterprises have higher cash dividends payments than immature ones.At the same time,compared with immature companies,the impact of executive compensation on the relationship between managerial ownership and cash dividends is also reduced.