| Under the background of the reform of non-tradable shares, we study the signaling content of cash dividend of China listed firms. In this paper, we concentrate on two questions: one is whether the cash dividend policy has effect on stock value; the other is whether it can signal corporations' future earnings. The paper is organized into six chapters.Chapter1 is the introduction. We sum up the meaning of research, innovations and the structure of this paper.Chapter2 summarizes the signaling theory and the classical models concern, then gives an empirical study survey.Chapter3 talks about the research background of this paper. We divide the time into four periods which began with the building of Shanghai and Shenzhen Stock Exchange. Dividend distribution promise is a special phenomenon occurred during the reform of non-tradable shares which in the fourth period. We analysis the listed firms on their characters of cash dividend before and after the reform, and discuss the huge influence the change of non-tradable shareholders' benefit mechanism has on the dividend decision, then we analysis the industry distribution and cash dividend policy of the samples.Chapter4 conducts an empirical study on market reaction to cash dividend information. By applying the regression method and controlling such factors as earnings information, B shares, we test the announcement effects of cash dividend changes. We find that the results strongly support the signaling hypothesis.Chapter5 researches on the information content of dividend changes. We investigate whether dividend changes can forecast future earning. The result shows that only dividend increases provide information about the level of profitability in subsequent years, while dividend decreases have no information content. The results support the information content of dividend hypothesis partly.Chapter6 draws a conclusion and recommends feasible suggestions to regulation department and dividend policy maker. |
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