The Correlation Analysis Between Dividend Stock Of The Listed Companies And Their Long-term Share Price

Dividend Policy is one of thee corporate financial decisions in parallel with investment and financing activities, this problem is not only a main focus of corporate finance research but also an important issue in corporate finance practice, a good many research scholars have been paying attention on it. Dividend policy is an inner corporate governance mechanism which makes the funds-suppliers of the company get their reasonable returns from their investment. Different dividend policies have a direct influence on investors’ investment returns, the expectation of stock evaluation, and the adjustment of investment strategies.In China, stock dividend is always a focus of the interest of the market. In the case of not changing the cash flow and ownership structure, it makes no influences on company by increasing the quantity of circulation stock or changing the account. However, the domestic and foreign researches demonstrated that during the event period, the objects of observation indeed had the unusual income. How to explain this phenomenon becomes the bone of contention of the theory and practice fields. This paper studies the stock dividend on an annual cycle, trying to prove if it would bring cumulative abnormal return to investors.Based on the Signaling Theory, this paper selects representative years of investigation(2007-2011), stock dividend events in A-share market, the announcement date as the event date, event study method, multiple linear regression method and T-test method to analysis the abnormal reaction and the factors of impacting the abnormal returns. On the other hand, we examine company management’real motive of the implementation of pure stock dividend policy by analyzing the information content of the stock-dividend changes. This dissertation trys to provide rational investment basis for investors, reduce their investment risk; provide valuable theoretical basis for the effective implementation of the dividend policy, especially the stock dividends,of listed companies; provide the basis of the regulation for regulators to how to standardize the market behavior of listed companies, protecting the interests of investors.After the study on the long-term market reactions to stock dividend, it turns out that:(1) During the period of one year, the stock dividend can bring abnormal returns, the main reason is that investors think the stock dividend distribution means that companies have the confidence to revert share index to previous level, so it releases the high-growth signal, and investors sought after stock dividend;(2) Cumulative abnormal return and stock dividend has a significantly negative relationship, namely that when stock dividend ratio is higher,12months cumulative abnormal return is lower.Through the inspection of the information content of the stock-dividend changes, the conclusions are as follows:(1)The current year’s net profit growth rate of the companies which decrease stock dividend is significantly less than the enterprises’which increase stock dividend;(2) Stock dividend has a positive correlation with net profit growth rate of the year, but no significant correlation with the previous year and the next year;(3) The cumulative abnormal return of listed companies which increase stock dividend is less than the listed companies which decrease stock dividend, this shows that A-share market prefer the behavior of decrease stock dividend.In this paper, empirical results show that, under the background of full circulation of stock market, dividend policies indeed signal some growth signals, and the market has a certain reaction, but the function of signalization remains to be strengthened in the further. Finally combining with the empirical results, this paper gives concrete suggestions to the regulators, listed companies, especially the investors.