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The Influence Of Cash Dividends To The Listed Companies' Share Price

Posted on:2017-05-14Degree:MasterType:Thesis
Country:ChinaCandidate:Q B LiuFull Text:PDF
GTID:2349330512956659Subject:Finance
Abstract/Summary:PDF Full Text Request
Dividend policy has great importance to the development of the stock market. It can improve the investment function and attraction of the market. And in the developed market, Cash is the main way of dividend. From 2008, CSRC (China securities regulatory commission) had supervised the listed company to improve the internal decision-making mechanism and increase the transparency of dividends to help the stock market develop more healthily and quickly. After a series of policy, more and more listed companies begin to distribute cash dividend, which is a great progress for the stock market. But, there are still many defects for present situation of the cash dividend such as the high concentration of companies who prefer to cash dividend, the disconnected and in stable dividend policy and the phenomenon that the developing companies tend to distribute more cash dividend than the developed ones. The first two phenomena are widely studied while the last one is not. So this article is trying to study the question that whether the cash dividend has different influence on the companies with different growth.Miller & Modigliani are the first scholars to study dividend policy and by specific assumptions, they proved that the stock price would not change with dividend policy. While, the research of cash dividend policy is originated in the hand of the theory put forward by Graham. And the follow-up studies of cash dividend policy are based on the breaking of the four assumptions that dividends have no influence on the stock price. In China, the former stage of cash dividend research is focused on its influencing factors and the following stage is mainly focused on whether the existing or newly issued cash dividend policies are reasonable or not.By synthesizing the relevant articles studying cash dividend policies, it is found that the researches of cash dividend policies are not sufficient and the conclusions are full of disputation such as how the cash dividend will influence the stock price, positive, negative or no influence at all. But, there are few scholars have researched the difference influence of cash dividend on companies at different stage of life cycle. So, this article is trying to figure out the two following questions:firstly, whether the distribution of cash dividend can influence the stock price or not; secondly, if the answer to the first question is positive, whether there is any difference to companies at different stage of life cycle.Compared with the former researches, there are two innovative points in this article. Firstly, it chooses a longer time period which can figure out the long-term impact of a policy. Secondly, it starts from growth rate of total asset (GRTA) and dividend payout ratio (DR) of a company which can divide the companies into different stage of life cycle, and then it discusses whether the "one size fits all" cash dividend policy is reasonable.Despite that this paper has tried its best to make the results more accurate, defects are still inevitable. Such as it doesn't prove that the growth and free cash flow are reasonable measurements of life cycle, and it doesn't tell the readers whether the different distribution level attached to different companies is reasonable or not.In general, there are 6 chapters in this article.Chapter one is an introduction which explains the background, meanings and research methods of this paper.Chapter two is the literature review and Chapter three is theoretical basement of this paper. The two chapters together lay a good theoretical basis because it is the previous studies-whether mature or immature-that point out the direction for this article.Chapter four to five are the main body of this article which answers the two questions in this paper. Chapter four gives a detailed introduction of the data, variables and research methods of this article, and on this basis, chapter five analyzes the empirical results. It is proved in this article that:a) in general, distribution of cash dividend can bring a positive influence on stock price; b) but stock price of companies with higher growth rate and lower free cash flow has an opposite performance.The last chapter includes the conclusion of this paper, some advices based on the empirical analysis and the progress in the future research.
Keywords/Search Tags:cash dividend, abnormal return, life cycle, dividend police
PDF Full Text Request
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