A Study On The Signal Effect Of China GEM Listed Companies’high Cash Dividend And High Stock Dividend & Stock Split

The dividend distribution policy of listed companies is closely related to the companies’development. It will affect the benefits of the company’s stakeholders. Dividend distribution policy has the function of passing information to the market. Therefore, the managers of listed companies usually set different dividend distribution policy to give different information to the market based on their purpose. By Signal transmission theory, the imperfect market mechanism leads to the asymmetric information. The managers of listed companies can reasonably use the signaling effect of dividend distribution policy to transfer the companies operating condition and development prospects to investors. If the signal effect of dividend distribution can play fully, it will effectively promote the stock market information unobstructed. It will not only be good for investors but also good for listed companies. The securities market of our country was set up late. Whether in the market regulation or in management of listed companies, the securities market of our country is far from foreign mature market. And the GEM of our country did not appear until 2009, therefore, no matter compared with the western mature market or other sectors of our country securities market, the GEM listed company’s dividend policy signal effect is likely to have its own characteristics. In recent years, the GEM listed companies of our country present phenomenon of high cash dividend and high stock dividend & stock split. Some investors are optimistic for this phenomenon, and the other part of the investors are pessimistic. Some experts have made studies on the signal effect of high cash dividend and high stock dividend & stock split about the main board or SEM. The stocks of the GEM listed companies in China are highly welcome in the market, and the gem listed companies have huge demand for capital. Combining the current research status and the characteristics of the securities market in China, the phenomenon of high cash dividend and high stock dividend & stock split in the GEM listed companies has great exploring value. Research on this question will enrich the theory of dividend distribution and promote the development of securities market of China.The article consists of six parts. The first part is introduction, including the research background, research significance, related research results in China and abroad, research methods and possible innovation of this article. The second part is the related concepts and theoretical basis, including the definitions of the GEM listed companies, high cash dividend and high stock dividend & stock split, and the theories of signal transmission theory, "a bird in the hand" theory, agency theory and pecking order theory. The third part describes the phenomenon of high cash dividend and high stock dividend in GME listed companies. By using the event study, the fourth part explores the signal effect of the GEM listed companies’ high cash dividend and high stock dividend & stock split on stock prices. By using multiple linear regression method, the fifth part explores the signal effect of the GEM listed companies’ high cash dividend and high stock dividend & stock split on company’s future growth. The sixth part summarizes the research conclusion of this paper, and proposes corresponding suggestions.Through this study, we found that the high cash dividend and high stock dividend behavior of GEM listed companies in our country have a signal effect on stock prices. Investors can gain abnormal returns in the days surrounding the dividend distribution policy announcement date. But, this kind of abnormal fluctuations appears before announcement day. So there is the phenomenon of information disclosure in security market of our country. The study also found that the GEM listed companies in our country’s normal high cash dividend can pass the signal of high growth. But abnormally high cash dividend can pass the signal of negative growth, and high stock dividend & stock split cannot reflect company’s future growth.