Semi-mandatory Dividend Policy And Earnings Managment Methods Selection

The main methods for investors to get income from the stock market are capital gains and dividend distribution,however,due to the strong speculation,the stock prices change violently.So,the role of cash dividends to protect investors is more prominent.But the development of China's capital market is not mature enough.There are still some defects in the system.The miser images showed by some listed companies,which pay more attention to refinance but less to dividend,are criticized by small investors.In this context,China's Securities Commission has launched a series of Semi-Mandatory Dividend Policy since 2001,intended to regulate the dividend behavior of listed companies,guide and urge them to carry out cash dividends.Therefore,it is of great theoretical and realistic significance to study whether these policies play a positive impact for cash dividend.At present,the research on the Semi-Mandatory Dividend Policy in China is mainly focused on the evaluation of the overall effect,and there is little research on the impact of the policy on earnings management.Therefore,this paper attempts to explore whether the Semi-Mandatory Dividend Policy will exacerbate the contradiction between financing and dividends,which leads to the opportunistic behaviors of listed companies?Due to the different manipulation means,will the degree of accrue earnings management and real earnings management show differences?Further,what factors will the above differences affected by?In order to verify above assumptions,this paper is based on earnings management theory.Then I select listed companies in Shanghai and Shenzhen A-shares from 2001 to 2015 as research samples to investigate the behavior of earnings management before and after the Semi-Mandatory Dividend Policy of SEO companies.Finally I draw the following conclusions:(1)Semi-Mandatory Dividend Policy led to a significant decline of the real earnings management and increase of accrual earnings managenment of SEO companies.The SEO companies prefer to choose accrual manipulation than real way.(2)Under the same conditions,the large proportion of institutional ownership,better financial situation,higher audit quality and market position will inhibit above substitution effect significantly.Further study found that the investor protection function of Semi-Mandatory Dividend Policy doesn't work insufficiently,but due to the inhibition of the real earnings management,it contributes to the improvement of the long-term performance while the increase of accrual earnings management declines short-term performance.Earnings management played a mediating role between the Semi-Mandatory Dividend Policy and corporate performance.This study reveals the relationship between cash dividend and earnings management in a certain extent,but also enrich the literature of corporate governance,and may provide certain reference value for the formulation and reform of Semi-mandatory Dividend Policy.