Abstract: In recent years，dividend stability is widely concerned by investors and regulatory authorities． From the perspective of “substitution effect” and“ consequence effect”，two possible paths of the impact of investment efficiency on dividend stability are summarized respectively．Using the data of Shanghai and Shenzhen A-share listed companies from 2005 to 2019，this paper studies the impact of investment efficiency of Chinese enterprises on dividend stability，and conducts heterogeneity analysis．The empirical results show that the improvement of investment efficiency can significantly promote the stability of cash dividends．In particular，reducing the degree of overinvestment would improve dividend stability． Further research shows that the inhibiting effect of inefficient investment，especially excessive investment，on the stability of dividends，mainly exists in non-state-owned enterprises and enterprises with low information transparency．

Key Words: dividend stability; investment efficiency; over investment; entrusted agency