Institutional Investors, Dividend Policy and Firm Value—Evidence from China

Abstract

The China stock market and institutional investors have experienced an extraordinary develop- ment during the past decades. Therefore, it is important to examine the real effects of institutional investors. This paper investigates relationship between institutional investors and firm value using Chinese listed companies from 2008 to 2014. This paper finds that institutional investors help improve firm value. Further analysis shows that institutional investors improve firm value by increasing cash dividend payout. The empirical results of this paper show that institutional investors help improve corporate governance and reduce agency costs.