Counterbalance Mechanism of Blockholders and Tunneling of Cash Dividend: Evidences from Chinese Listed Companies from 1999 to 2003

16 Pages Posted: 3 Sep 2008

See all articles by Yuejun Tang

Yuejun Tang

School of Management, Fudan University

Rengming Xie

CITIC Securities

Date Written: September 3, 2008

Abstract

In this paper, due to the important influence of corporate governance on corporate financial behaviors and from an angle of corporate governance, we develop six hypotheses based on overseas and home relevant researches and data of Chinese listed companies from 1999 to 2003, and then we do hypotheses testes with regression models to examine the impact of share percent of the top 5 shareholders and counterbalance mechanism among blockholders on cash dividend distribution of listed companies, and to explore influence and counterbalance mechanisms in tunneling of cash dividend which derived from the special phenomena of "same shares same rights but different price". We find that share percent of top 5 shareholders, control ability (or combined control ability) and balance degree (or combined balance degree) of blockholders have important influence on tunneling of cash dividend distribution. Lastly, the paper proposes five suggestions to restrict controlling shareholders to enlist private interests from tunneling of cash dividend and to protect rights and interests of small and medium shareholders.

Keywords: Blockholder Counterbalance, Cash Dividend, Tunneling, Corporate Governance

JEL Classification: G34, O16

Suggested Citation

Tang, Yuejun and Xie, Rengming, Counterbalance Mechanism of Blockholders and Tunneling of Cash Dividend: Evidences from Chinese Listed Companies from 1999 to 2003 (September 3, 2008). Available at SSRN: https://ssrn.com/abstract=1262786 or http://dx.doi.org/10.2139/ssrn.1262786

Yuejun Tang (Contact Author)

School of Management, Fudan University ( email )

No. 670, Guoshun Road
No.670 Guoshun Road
Shanghai, 200433
China

Rengming Xie

CITIC Securities ( email )

Beijing
China

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