A Study On The Implementation Effect To The Semi-mandatory Dividend Policy Aiming At SEO

Dividend policy and financing policy are two of the most important enterprise’s financialdecisions. Different from western developed capital market’s listed companies, Chinese listedcompanies on the one hand have a soft spot on seasoned equity offering, and on the one hand,and they don’t tend to make stable dividend policy. From2001to2008, the Chinese governmenthave introduced semi-mandatory dividend policies four times in succession linked equityrefinancing qualifications with the level of dividend distribution of listed companies, intendingsolve the problems of the low financing efficiency and “Heavy money, light returns”.In addition,our listed company which are SEO often have spotty quality, a great part of money rising frominvestors never returned,.The governments want to screen out companies which really havedevelopment potential but short of funds through their supervision.This paper’s background is mainly about the latest policy <Several provisions aboutmodifying cash dividends of listed companies> issued by the China Securities RegulatoryCommission in2008.And we selected145public equity refinancing listed companies from thedate of October9,2008to the2013which have announced annual report as research samples,and selected un-equity refinancing companies which are in the same period, in the same industrywith the same size as reference samples. This article builds the analysis model and empiricallystudy catering behaviors of market after the policy implementation and the effect of short-termand long-term performance of the listed company. The results proved that Chinese listedcompanies have significant catering behaviors to the Semi-mandatory dividend policydistributed by the China Securities Regulatory Commission. Recent three years annual cashdividend payment rate of listed companies who are public equity refinancing is higher than un-refinancing listed companies. And SEO’s companies have obvious manipulation behavior to thedividend distribution. The bigger of dividend variation coefficient, the higher the volatility of the first three years cash dividend. Companies which have the needs of SEO frequently adjust theirdividend policies in order to meet the standard of CSRC about semi-mandatory dividend policy.The performances of SEO companies are no better than the other un-SEO companies which havethe same size and are in the same industries, and the same is performance improvements. Thegovernment declares failure. This, to some extent, is equivalent to SEO company use moneyraising from investors to punish them. Reasons may be that the SEO companies pretend to begood quality of the enterprise by means of manipulate profits through abnormal accrued itemsbefore SEO to reach the requirements of the CSRC. However the policy did not see through thisarrangement. Policy implementation effect may lead to the” Regulation paradox”, and theintervention in corporate dividend decisions can’t escape from being preempt the suspect,market resources have not get optimal allocation. Regulators authority should reduce theadministrative intervention in terms of equity refinancing to speed up the marketization process.In the end, this article proposes advices in view of the empirical analysis results aboutimprovements in government regulation and corporate dividend policy in China. This paperhopes to have a certain theoretical and practical significance for the listed company’s financialpolicy and government regulation of capital market.