Dividend distribution of listed companies after the finance and investment is the return toshareholders for distribution of operating results, which is one of the core corporate financeactivities in companies. As ownership and management of corporate are separated, leadinginvestors and administrators have information asymmetry. The listed company operators havemore information, than investors, about the company’s future profit ability, operation ability,growth ability and various aspects of private companies. The dividend signaling theoryconsiders that, because of the asymmetry information and the partially ineffective market, thelisted company dividend distribution can act as an effective signal to investors about thecompany’s future business prospects. For our country, as high-tech corporate finance hasbeen launched on the GEM in2009, the GEM has exhibited very difference from themotherboard market dividend distribution characteristics, namely high dividends, highconversed dividend policy. What is more important is that the dividend distributioncharacteristics have arisen market investors’ extensive attention. This paper aimed to explorethat whether high dividends have the signal effect, and that whether high dividends pass outinformation to investors about the company’s future business perspective at an early stage ofthe companies listed on GEM.In this paper, we took dividend distribution events of companies listed on GEM form thebeginning of2009to the2012as samples. With the application of the dividend signalingtheory and a combination of normative and empirical research methods, this paper analyzeddividend policy signaling effect of China’s companies listed on GEM. The results showed thatdividend policies of companies listed on GEM do have a signaling effect, and that differentdividend policies can lead to different market reactions. At the same time, in terms ofdividend signal strength, the market reactions vary with the changes of unexpected dividends.The next regression analysis, however, showed that the dividend policies are not signals topass out information about the company’s future business prospects, but about the currentresults of operations. Based on the research, this paper also provided some reasonablesuggestions for the GEM dividend policy and investors’ behaviors. |