Ultimate controlling shareholders and dividend payout policy in Chinese stock market

摘要

Departing from the traditional cash flow rights-dividend policy framework, this study investigates whether the level of control rights and the types of ultimate controlling shareholders (UCSs) of listed firms in China influence their cash dividend payout. We find that the level of control rights is positively associated with both the probability to pay and the level of cash dividend payout, which indicates that UCSs use cash dividends to reduce the agency cost of free cash flow and redirect listed firmsu27 cash balance. Furthermore, different types of UCSs influence dissimilarly on the controlled firmsu27 cash dividends, which can be attributed to the backgrounds of these UCSs originating from Chinau27s unique partial share issuance privatization process.