Family Control, Governance Environment and Cash Dividend Policy in China

Using a sample of 1486 Chinese A-share listed companies between 2004 and 2007. This paper empirically tests the impacts of family control, governance environment and their interaction on cash dividend policy of Chinese listed companies. The results show that, (1) family companies have lower dividend payout possibility and ratio than non-family companies; (2) companies in better governance environment have higher dividend payout possibility and ratio; (3) family control reduces the dividend payout possibility and ratio significantly only when the governance environment is relatively poor; (4) with the improvement of environment, family companies improve dividend payout possibility and ratio. We also find that controlling family shareholders in China may reduce the dividend payment so as to achieve private benefits by other ways like "funds occupation", and the good external environment plays a positive role in corporate governance.