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Study On Stock Distribution Of China’s Listed Companies

Posted on:2011-06-29Degree:DoctorType:Dissertation
Country:ChinaCandidate:L SuFull Text:PDF
GTID:1109330332482875Subject:Business management
Abstract/Summary:PDF Full Text Request
"Dividend Puzzle" has been an important part of financial academic research for a long time. Scholars have done a lot of theoretical and empirical research, and have made many achievements. In the economic restructuring and the rapid development of China’s economy, dividend policy of listed companies shows their own characteristics. Chinese listed companies are accused of adjustment financial decisions, including dividends policy, in accordance with the maximize benefits of controlling shareholders. The companies would rather let performance slide, but also willing to choose the dividend stock or capital surplus reverse into share capital, which results "the puzzle of China’s dividend policy". Then, what is the effect of the stock distribution, if it damage to the interests of shareholders? These are our concern.Background of the economic system in transition, this dissertation based on signaling theory, retained earning theory and agency theory systematically study China’s listed companies’ stock distribution policy how to effect short-term shareholder wealth, long-term shareholder wealth, companies long-time development and company’s ownership structure.The study enriches dividend policy research literature, and then provides a theoretical basis for company’s reasonable distribution decision-making and the optimal allocation of social resources. The result of empirical test shows that:1. Stock distribution is not just an "accounting cosmetic behavior", but has brought the practical implications of short-term shareholder wealth, long-term shareholder wealth and ownership structure. Listed companies that pay stock distribution are associated with a significant positive market reaction which associated with increased systematic risk.2. Based on the theoretical analysis, from the point of view of retained earnings, the stock dividend did not bring the costs associated with debt covenants terms. and according to corporate law, there is no different between stock dividend and capitalization of capital reserves. So the retained earning hypothesis does not hold which is supported by empirical results. Tax effect can explain the phenomenon which announcement reaction of stock dividend is less than capitalization of capital reserves.3. Agency theory has more explanatory power for stock dividend announcement effect, and debt level and property of control right are significant explanatory factors of stock dividend announcement effects. We also found out that there is "U"-shaped relationship. The property of control right will increase high debt level company’s stock dividend announcement effects.4. From the long-term effects, the long-term markets returns and long-term accounting performance of stock dividend’s company are significantly higher than matching companies. So signal effect has some explanatory power. Comparing with stock dividend companies and capitalization of capital reserves companies, the later has higher performance. It is consist with short-term analysis.5. Finally, the stock distribution policy will change the company ownership structure. The information transmitted by stock distribution is asymmetric between Institutional investors and outstanding shares. Institutional investors access to information, leading to large increase of institutional investors.
Keywords/Search Tags:stock distribution, the retained earnings hypothesis, agency theory, ownership structure
PDF Full Text Request
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