An Empirical Study On The Effect Of Cash Dividend Signal Transmission In China 's Shanghai A - Share Market

Dividend distribution policy, as one of the most important topics in corporate finance, is closely related to market environment and corporate governance. In western capital market, there exists distinct dividend signaling effect. However, as for China, the dividend signaling effect may be not fully reflected because of its own shareholder structure reform. It was until2005China had started the reform of shareholder structure. Whether the policy will contribute to improve the Chinese capital market environment and strengthen the dividend signaling effect, is important in testing the effect of shareholder structure reform.Based on the information transfer hypothesis and considering the unique shareholder structure reform in China, the paper tries to conduct an empirical study of cash dividend policy of the A-share listed companies in Shanghai security market, and test the signaling effect from the perspective of both short and long term.The paper is. structured from the following four aspects. Firstly, it’s the introduction of empirical study, including the research objectives and significance. Secondly, it makes a review and classification of relevant literature about cash dividend signaling effect at home and aboard, and elaborates the main characteristics of listed companies’ shareholder structure, also the shareholder structure reform. Thirdly, it introduces efficient market theory, information asymmetry and capital structure theory. By incorporating the event study, it calculates the short-term abnormal return and cumulative abnormal return to test cash dividend signaling effect. For the long-term part, it establishes multi-variable regression to test the signaling effect of abnormal return. According to the empirical results, the shareholder structure reform does not significantly improve the cash dividend signaling effect, instead, there exists significant relationship between the signaling effect and corporate governance. Finally, the paper makes a summary of the empirical study and proposes relevant advices in how to protect the interest of investors, specific for the capital market in China.