Study on the Effect of Firm´s Dividends on Shareholders´ Balance Mechanism

Based on the endogeneity of the ownership structure, this paper uses panel data to show the dynamic effect of Chinese Listed Companies´ cash dividend distribution behavior on the shareholders´ balance mechanism. We find minority shareholders don´t perceive cash dividends, at least normal level of dividends, as controlling shareholder´s expropriation behavior, especially in companies that controlling shareholders dominant. Taking into account of the ownership structure´ exogenous feature, We use a Simultaneous Equations Model to show the interactions between cash dividends and shareholders´ balance mechanism. We find the higher level of Chinese Listed Companies´ cash dividends, the lower degree of balance among shareholders; the lower degree of balance of shareholders, the higher level of companies´ cash dividends.