Research On Market Effect Of A-share Listed Company’Dividend Policy

Dividend policy is a kind of financial strategy to dispose the net profit of listed company between stockholders’profits and earning inside the company. It is not only the part of the extension of financial and investment activities, but also has big influence on the development of company on future, as one of the three core policies, it also can bring amount of effects on market, especially the fluctuation of its stock price, because it can reflect the situation of company running and development strategies. Dividend is the major revenue from stocks, whether it is reasonable or not is closely related to the interests of investors and the development of Chinese capital market. The foreign scholars have done a large number of theoretical and empirical researches on setting the dividend policy since1950s, they have done a large number of theoretical and empirical research on dividend policy, mainly confusing on debates on whether dividend policy affect the stock price, but they do not make the same conclusion.Since establishment20years ago, Chinese stock markets become stronger and stronger, has become the world’s second-largest stock market, while stock markets of developed countries have established for a hundred years. But there are still many problems need to be solved and show significant Chinese characteristics, compared to the maturity securities markets of developed countries. In recent years, the distribution situation of dividend payments in listed company in China is complex with simultaneous existence of several kinds of distribution, but cash dividend gradually become the most important form of payment. Low dividend payments, unstable dividend policy are normal problems, and also the companies without paying dividend occupy a large proportion of listed companies. Compared to mature markets, domestic listed companies not only follow the differences of dividend policies, but also show the significant differences under the influence of different types of dividend policies. Most scholars agree that the dividend policy affect the stock price, but scholars in different periods make different conclusions, because of different stock market environment and the sample selection, so it is necessary to do further research on the market effect of the dividend policy in the new market condition during new times.By choosing the listed companies in Shanghai and Shenzhen A-share which have published the annual dividend distribution plan of2011as the research samples, this paper uses the event study methodology to discuss the impact of dividend policy on stock price. Different dividend policy mainly reflected in different forms and different level of dividend payment. This paper group samples by the dividend payment form and dividend payment ratio, it suppose that the preplan announcement date is defined as the event date, and the days from fifteen days before announcement to fifteen days after that are defined as the event window,then classify it as several small event windows. By censuring the cumulative abnormal return of different samples during even windows to analysis the impact of on stock price different distribution methods and different pay levels in event windows. The empirical results show that different dividend policy indeed cause different and excessive market effect followed dividend announcement. Then return to rational situation in a short period of time. Both stock dividends and mixed dividends show obliviously positive effects to dividend announcement, while cash dividends and no-payment plan show significant negative effects. The study on cash dividend with different payments rates find that the influence on cash dividends gradually improved from negative to positive effect with the increase in the rate of dividend payment. At last, this paper put forward to relevant policy recommendations respectively on three parts, including regulators, listed companies and investors, according to the study on the status of the dividend distribution and the empirical results. It aims to bring beneficial profits to the development of security market in China.