An Examination Of Long-term Performance Following Stock Dividends In A-share Companies.

The topic "signaling effct of dividends" is one of the hottest topics in academic research, this paper focus on the stock dividends of listed companies. The whole research is refer to not only the content of the signal but also the long-term behavior of the companies which conduct dividends, aimed at to figure out weather the stock dividends is a positive signal for the future of the listed companies.Many researchers discovered that there is obviously positive abnormal return before and after the stock dividend event. If the signaling effect does exist, we will observe good company behaviours in the following years after sending stock dividends. However, the empirical research gets the opposite results, which can't support the signaling effect. In order to do deeper research, we make an examation on the long term abnormal market return of the companies sending stock dividends. The results tell us the long term abnormal market return is negative. Combining the behavior before the dividend event and long term return, we can conclude that the price of such companies firstly went high in a short time and then went low during a long time, which means the stock dividend event itself does not transfer the informantion about the companies' future.About the research methods, the main line is choosing the matching companies for the event company (sending stock dividend) based on the industry codes as well as companies' profitability. Spicificly, this paper uses the EBIT operating margin as the indicators of operating performance and uses the Fama-French three factors model as well as zero investment profolio to examine the long-term abnormal return.