Controlling Shareholder, Split-Share Structure Reform and Cash Dividend Payments in China
38 Pages Posted: 30 Jul 2011 Last revised: 6 Jan 2012
Date Written: July 4, 2011
We investigated the relation between changes in cash dividend payments, non-public tradable shares, and the percentage of ownership of the controlling shareholder in Chinese firms before and after the Split-share structure reform. We found a significant reduction in cash dividends before and after the reform. Importantly, the reduction in cash dividends was significantly related to the reduction in the largest shareholder’s ownership; however, not associated to the decline in non-publicly tradable shares. These results suggest that Chinese controlling shareholders’ preferences for cash dividends is attributable to the inherent illiquidity of their shares rather than non-tradability of shares.
Keywords: Cash dividends, Controlling shareholder, Non-publicly tradable shares, Split-share structure reform, China
JEL Classification: G35; G38
Suggested Citation: Suggested Citation