Research On The Market Effects Of The Stable Dividend Policy

Small and Middle Size Enterprise (SME) board, officially launched on May27,2004, has experienced more than eight years’ development. Because the regulation of SME board operated by Regulatory bodies also become more sophisticated, the SME segment has gradually developed into a mature standard stock plates. Companies listed on SME board generally have faster revenue growth and stronger corporate earnings. There are many types of high-tech companies including in other SME board, known as "China’s future Nasdaq". Operating conditions and market performance of listed companies in SME board are tending to attract the attention of the parties.Dividend policy has an important contact between the companies and the stock market investors. In the Western study, dividend policy has been researched for half a century. China’s scholars began to involve in this field of research from the last century1990s. To get meaningful results, these scholars combined with China’s national conditions. After many years dividend policy is still enduring hot spots. Unfortunately the domestic research literature on dividend policy involves few the SME board listed company research and dividend policy stability affect. Study on small plates listed companies’ dividend policies which are related to China’s small and medium-sized plate can continue china’s economical development and to promote the constant improvement of China’s capital market. How to really develop the future "China’s Nasdaq" has an important reference to dividend policy, the regulators, listed companies or investors.Sampling from SME board listed company in the, this paper will analyze and research the market effect and its impact on the enterprise value and the stability of the SME board listed company dividend policy. Overall, this essay is divided into three aspects:First, verifying the cash dividend policy transmission mechanism in China’s small and medium-sized plate; Second, verifying the stability of the cash dividend policy for dividend signal conduction is less than accidental faction now dividend policy; Third, verifying the stability of the cash dividend policy can bring higher enterprise value. This paper attempts to study the effect of SME board listed companies to distribute a stable dividend policy through three validations to regulators, policymakers, the listed company’s dividend policy considerations and the investor’s investment philosophy.After reading various domestic and international literatures on the theory of dividend policy, combined with the current situation of China’s stock market, the study identified the dividend signal theory in modern dividend theory as the theoretical basis of this study. Researching dividend distribution policy and statistics on the SME board in recent years, this paper indicates some of the characteristics of China’s small and medium plate market listed companies: dividend distribution of listed companies is widespread, and more prefers in the payment of dividends with cash; most continuous stable companies applies cash dividend policy, but they paid lower the level of dividends; There are some high cash dividends events, but they are rarely sustained dividend policy. Dividend signaling effect statistical analysis research with the selected event study method. Focusing on the SME board listed company’s cash dividend policy announcement, select the same day of the dividend plan announcement as the event date, and the first ten days of the event date to ten days after the event to calculate the average abnormal returns of the sample stocks of the event period AAR and cumulative abnormal returns CAR, the final cash dividend of small plates on the market signal pass-through effect carried a significant test. After this, set the continuous and stability of small plates listed on the company’s cash dividend policy as a starting point, then the sample group is divided into two sub-sample group comparison study group of two sub-samples which are consecutive cash dividend the company group. Paired test uses two-sample and T method. The final conclusions are:the market listed companies of small plates cash dividend policy signaling effect does exist; small and medium plate market is still not perfect, there is some insider information; stable dividend policy issuance will affect the mechanism of the effect of the dividend signaling which is relative to the fortuitous the dividends event; stable dividend policy has a smaller dividend signaling effect; There was no significant difference between the two groups’affect on enterprise value. As the conclusion of the three questions listed, there are some analyses:first signal pass-through effect on the cash dividend policy in China’s SME board exists. This conclusion is similar as Western scholars of mature foreign stock market researches. Conclusion indicates the SME Board’s dividend policy indeed contains a certain amount of information. Its the conference cause certain market reaction; Followed by stable cash dividend policy, dividend signaling effect is smaller than the occasional cash dividends. This is because a stable policy signals will make the market stable and expected occasional dividends signal will cause the reaction of the market. Moreover, China’s stock market speculation phenomenon is more common for such accidental events which can often cause more hype theme. The accidental cash dividends in dividend policy signaling mechanism is more obvious; Finally, with regard to the stability of the cash dividend policy, there is no significant difference in enterprise value with occasional cash dividend policy or not. That is due to the characteristics of the SME board listed company dividend distribution is more stable dividend policy, but its high cash dividend payments are lower levels of this dividend policy and do not arouse the interest of investors in the market. Because our market investors seek more opportunities for speculation, few of them focus on the future growth of the enterprise.According to the results obtained by the empirical research, this study found that some of the problems of the small plates on the market:information leak exists, often before the introduction of the dividend plan announcement has been heard by the news; listed company dividend policy making unreasonable and good economic returns is unable effectively to positive signal distributed to the market, and poor operating performance of companies is likely to pay dividends with its misappropriating suspect; With excessive speculation in the market, investors often prefer occasional speculation to obtain price change capital gains, and does not focus on the long-term development of the company’s value investing. After that, according to the preceding discussion, the empirical results combined with the characteristics of small plates listed company dividend policy this article, this article makes the following recommendations:SMEs should be a reasonable use of dividend policy signaling mechanism. The enterprises which perform well can give a positive signal to the external market, and ultimately get a win-win situation of enterprises and investors; Government and regulatory authorities should strengthen the guidance, supervision and management of the market of small plates. The dividend signal transduction utility would provide a good environment. China’s small and medium plate market gradually improve and mature; Government and regulatory authorities should be introduced about the policies and regulations of the dividend payment. The dividend policy of the listed companies should be more specified; Recommendations related to the regulatory authorities punish listed companies who made the false signal maliciously misappropriating through dividend signaling mechanism to prevent China’s securities market; Finally, it is recommended that investors are rational investment, learn the true investment value of the enterprise through the dividend policy signal screened.The major innovation of this study has two aspects:One is the innovation of the object of study. Select the object of this study is less in the previous study on dividend policy. Small plates listed company is unique, showing some laws with the motherboard. Selecting the object for the study has a greater significance. Another one is innovation research perspective. Starting with researching dividend policy and verify dividend policy signaling utility, this paper tries to search the differences between a stable dividend policy and the impact of the non-stable dividend policy. Selecting from the point of view of the stable dividend policy continuity is rare in the previous literature.There are seven parts in this paper:introduction is the first part, including the background, significance, research ideas, innovation and structural arrangements; The second part of the literature review, research done before the scholars of the West and China, respectively conclusions and methods to do the review and summarize; Theoretical basis is the third part, which introduce the theoretical the study involved the introduction focuses on the theoretical basis of the core of this article is that the dividend signaling theory; The fourth part is the small plates statistics and analysis of the current situation of the market listed company dividend policy; The fifth part is the design of the empirical research, the model used in the empirical analysis methods, sample selection methods, data selection and research hypotheses introduced and design; The sixth part includes discusses of results and analysis of the conclusions. The seventh part gives the policy recommendations to the market regulators, listed companies and investors.