The Study Of The Motivation Of "High Send Turn" In Security Market Of China

For many years, the subject of high send turn is always concerned by the investors. Although some of the public company convey their confidence of the company’s sustained growth of future to the outside investors by high-turn, and convey that the company is in rapid growth stage, which will help the company’s equity expansion. However, other companies with poor performance apply the hot subject of high turns to help the company’s equity expansion, then after High dividends sends turn the announcements the price of stock fall sharply in a few days, which cause to small and medium-sized investors make a large of loss. So what is the motivation of the public company which high sends turns? And how is the market reaction to high-turn? And how could the outside investors avoid the cash trap from high-turn? And how do the outside investors Grasp the annual quotation of high-turn?The article researched the motivation of the public company which sends high-turn by using event study analysis method and multivariate logistic regression, and the article selects the date of historical stock prices of the high-turn listed companies in the Shenzhen Stock Exchange and the Shanghai Stock Exchange which issued the high-turn announcement from 2008 to 2010 as samples. Based on our empirical analysis, we reach the conclusion that signaling hypothesis cannot explain the high-turn behavior of the listed companies on China’s capital market. However, the price illusion hypothesis which He Tao (2001) proposed was confirmed in some way:the company issued high-turn announcement so that they could get the higher price of shares, then, the higher the price of the shares, the more possibly the company issue the high-turn announcement. In addition, the article found other different conclusions which is the ratio of high-turns is not significantly associated with the company’s growth, and the relationship between the ratio and the future profitability of the company is significantly negative. The paper argues that this could be due to the high-turn can bring the company with high share price in a short term, which is impressed a large number of people, so when the manager of listed companies expected the company’s performance will decline possibly, they will apply high-turn which is a low-cost and low-risk way of financing to facilitate arbitrage in advance, so that to make up for the loss of future fell brought about by the decline in performance.Therefore, the high-turn behavior of listed company can not only help the investors to have a better grasp of the effect to stock price from the high turn, and allows investors to have a better understand to the overall situation of the listed company, then help them to improve Information identifying ability and vigilance, as well as to remind the regulators to strengthen the supervision of the information disclosure of the listed companies, so that go protect the interests of all investors. In addition, as an important category in the research of behavioral finance, it is helpful to understand the change of the abnormal returns before and after the high-turn announcement that to have a good understanding to the correct operation of the securities market and investors behavior preference.