Ultimate Controlling Shareholders and Dividend Payout Policy in Chinese Stock Market

36 Pages Posted: 2 Apr 2013

See all articles by Jianan Guo

Jianan Guo

Deakin University - School of Accounting, Economics and Finance

Date Written: April 1, 2013

Abstract

Departing from the traditional cash flow rights-dividend policy framework, this study investigates whether the level of control rights and the types of control of the ultimate controlling shareholders (UCSs) of listed firms in China influence their cash dividend policy. We find that the level of control rights is positively associated with both the propensity to pay and the level of cash dividend payout, which indicates that the ultimate controlling shareholders are likely to use cash dividends to redirect financial resources from the firms as other channels of tunnelling are blocked by Chinese security regulatory body. Furthermore, different types of ultimate controllers exert dissimilar influences on the controlled firms’ cash dividend policy. The difference might stem from the historical nature of these ultimate controlling shareholders originating from China’s unique partial share issuance privatization process.

Keywords: Control rights, payout policy

JEL Classification: G34, G35

Suggested Citation

Guo, Jianan, Ultimate Controlling Shareholders and Dividend Payout Policy in Chinese Stock Market (April 1, 2013). Available at SSRN: https://ssrn.com/abstract=2242798 or http://dx.doi.org/10.2139/ssrn.2242798

Jianan Guo (Contact Author)

Deakin University - School of Accounting, Economics and Finance ( email )

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