Study on the Equity Merger Reform,equity Structure and Cash Dividend Policy of State-owned Listed Company
|School||Zhejiang University of Finance|
|Keywords||share merger reform equity structure cash dividend policy state-owned listed companies the characters of direct-controlling shareholder|
This paper puts the study of Chinese state-owned listed companies’ cash dividend policy which is under the influence of the companies’ equity structure in the context that share merger reform has been completed in the main. On the one hand, state-owned listed company occupies a very large proportion in China’s security market. On the other hand, it has own particularity that it combines the properties of state-owned. These are the reasons why this paper chooses state-owned listed companies as the studying object.This paper, taking consideration of China-specific institutional background, constructs a systemic analytical framework of the dividend policy based on theories of property rights, principal-agent, agency-cost of dividend and corporate governance. Cause the characters of direct controlling shareholder of state-owned listed company has impacts on the company’s agency problems, which affects the dividend policy, this paper is the first one to distinguish two samples which respectively direct-controlled by state share holder and state legal persons.Using data mining and statistical technology, this study compares the distribution level during the year of 2003-2009 to examine how the share merger reform affects the cash dividend policy and how much changing comes about.The main conclusion of this article is as follows:The empirical study of the relationship between equity structure and distribution level of listed companies which direct-controlled by state legal persons shows: before the share merger reform, the non-tradable controlling shareholders have strong preference for cash dividends, cash dividend policy tend to become one of the benefit transportation "Tunnel" for majority shareholders. After the reform, this strong preference has dropped significantly. Thereby, this empirical study confirms that share merger reform optimized the equity structure of state-owned listed company of this type, so that unconscionable cash dividend policy has been noticeably restrained.The empirical study of the other type state-owned listed companies: before the share merger reform, the non-tradable controlling shareholders have fragile desire of cash dividends, and combining with other problems caused by corporate governance, they tend not to pay or pay less cash dividends. After the reform, this week preference raises. As the reason that share merger reform can only resolve the equity structure defect but agent problem also crucially caused the other corporate governance imperfections in the listed companies direct-controlled by state share holders, distribution of cash dividend policy raises slightly but not significantly.The empirical study of the correlation between equity balance and cash dividend policy shows: equity balance has been improved but still at a low level on account of the decrease of controlling shares, equity balance structure as one of the governance mechanism has not yet fully formed. In conclusion, equity structure of state-owned listed companies have been improved after the share merger reform, so as to bring about the unification of the interests of majority and minority shareholders and the mitigation of agency conflict, then make the abnormal phenomenon in cash dividend policy appear to become rational.Owing to the remarkable difference of how and much changing that the equity structure has taken place influences cash distribution of two sub-sample state-owned listed companies, further steps to optimize the governance structure or cash dividend policy should be updated and divided respectively according to each type of state-owned listed companies.