Cash Dividend: More Advantages or More Disadvantages----An Analysis Based on the Threshold Performance Hereogeneity of Internal Control

Cash Dividend: More Advantages or More Disadvantages----An Analysis Based on the Threshold Performance Hereogeneity of Internal Control


Author:MA Pengfei, DONG Zhu Journal:Journal of Shanxi University of Finance and Econom Date:2019(2)

Abstract: Using the data of A-share listed companies from 2011 to 2016 in Shanghai and Shenzhen as the sample, we analyzed the advantages and disadvantages of dividend payout from the perspective of the threshold performance hereogeneity of internal control. On one hand, when the internal control level is higher than the threshold level, the governance gains of cash dividends are greater than the costs. In this case, the payment of cash dividends or the improvement of dividends payment level would help to promote corporate performance, when the advantages of dividends payment are more than the disadvantages. On the other hand, the disadvantages are more than the advantages in opposite situation. Overall, the cash dividends of listed companies in China could reduce two types of agency costs and enhance the management level and financial performance of companies, which has proved and expanded the dividend agancy theory.
Key Words: internal control; cash dividend; agency cost; corporate performance; threshold effects

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