An empirical research on corporate governance and dividend policy of listed private enterprises in China

Abstract

This research explores the impact of corporate governance on dividend policy in nonstate-owned enterprises in China. The outcome agency model is applied. Correlation research design and multiple regression are used. The findings reflect corporate governance positively relates to dividend policy. It indicates high dividends will be paid to shareholders if an enterprise has strong corporate governance. The results further reflect the relationship between each corporate governance measures and dividend policy. Among those four corporate governance measures, board size and CEO duality have significant positive relationships with dividend policy. Nevertheless, board independence and managerial ownership do not have significant impacts on dividend policy. Based on this research, private enterprises in China should treat dividend policy as a crucial facilitator to generate long-term value for their shareholders. Furthermore, Chinese enterprises should pay more attention to protect the benefits of not only their shareholders but also their stakeholders.