The Empirical Study Of China Listed Companies’ Cash Dividend Levels Impact On The Stock Price

Dividend policy as one of the company’s three core financial policy has been of concern to all investors in the market, and it’s also a research field which is interested by many western scholars over the years.The cash dividend policy plays an important part among the different kinds of dividend policy.Reasonable levels of cash dividend policy which reflect the company’s management philosophy can not only stimulate the investment enthusiasm of the shareholders,but also stimulate management and the controlling shareholders’ rule passion.It’s helpful for the companies to win a better corporate image in the market and get more financial and development opportunity.However,because of the special nature of our social and economic structure, although the stock market has accumulated much experience after twenty years of rapid development,it’s still not mature enough.The companies have not given enough attention to dividend policy especially cash dividend policy,low level of cash dividend policy and even no cash dividend policy are common in the market.It not only affect the companies’ development and the investor’income,but also affect the development of the stock market and macroeconomic.Now the development of our country has entered into a new normal state,especially the economic development has entered to the low-speed stage.But what we cannot ignore is that the stock market plays a important role in the development of the economic.Therefore,under this situation the study of the company’s cash dividend policy and reasonable proposal which is benefit to the development of the stock market can satisfy Chinese real needs.Based on the dividend relevance theory,this article use Shanghai and Shenzhen 300 listed companies’ financial data in 2011-2013 as the sample and make use of event study,the cumulative abnormal income model and multiple regression analysis to study the relationship between the company’s dividend policy and the stock’s price.The results show that in the short time, different level of cash dividend policy will cause the fluctuation of the stock price,the low level of payment of cash dividend does not be liked by the market,a high level of cash dividends can make the stock price fluctuate significantly.But overall,the general trend of the stock price movements under different level of cash dividend policy is same. The first day after the dividend plan is be announced,the market’s excess return is negative and reaches the minimum value which indicates that because of China’s irrational stock market,cash dividend policy is not particularly loved by investors;in the long time,thelevel of cash dividend payments does not cause a significant impact on the stock price.Compared with the level of cash dividend payments, investors pay more attention to the stability of the listed company’s cash dividend policy. The behavior that listed companies are able to pay an annual cash dividend can give investors a greater sense of security and a higher loyalty.In addition,the listed company’s size and liquidity will significantly affect the fluctuation of the stock price.Finally,according to the results of empirical research the article provide proposals for the listed company to make reasonable and stable cash dividend policy,for investors to choose better company to investment,and for regulatory authorities to make reasonable laws or regulations.