The Tunneling Behind The "High Ratio Stock Dividends" Among Listed Companies

Since the end of 2014,the performance of the stock with " High Ratio Stock Dividends " was extremely active.Many companies which had the continuous reducing net income or even operated at a loss,still scrambled to launch the scheme.And it was followed with a large scale of stock selling by actual controllers and other groups.Senior executives' leaving was also followed by these events.Among these cases,SaiXiang's case not only had the typical characteristic of abnormal" High Ratio Stock Dividends ",but also had the typical feature of methods of decreasing.So after reviewing the related literatures,SaiXiang's stock dividend is set as the object in this case study.Through analyzing the relationship between the market reaction and tunneling,the study would like to find the reasons why high ratio stock dividend had become a way of share-price manipulation.Through analyzing system causes,the study would like to find the reasons why the tunneling could not be contained.In addition,this study also analyzes the methods of decreasing,to explore the influence caused by existing legal loopholes.It also extends the existing research content of the " High Ratio Stock Dividends".Although SaiXiang claimed that " High Ratio Stock Dividends " was management's good expectations for the company's development,but after analyzing SaiXiang's integrated finance capacity,in the use of Palipu analysis system,the study finds that SaiXiang's " High Ratio Stock Dividends " lack the support of company's existing ability.And in subsequent years,the company's performance did not improve and even worsen,hence such kind of stock dividend is harmful.Through further analysis,this study draws these conclusions:(1)Based on principal-agent theory,catering theory and " tunneling " theory,this study believes that SaiXiang's " High Ratio Stock Dividends " was its actual controller's behavior which catered outside investors' irrational preference for stock dividend to manipulate share price.In other words,the " High Ratio Stock Dividends" assists the tunneling.(2)After analyzing system causes,this study finds that,on the one hand,internal causes can trigger tunneling easily,such as one share being overwhelming big,unreasonable setting of board of directors.The circulation of restricted stock makes other executives' interests more consistent with the interests of the actual controller,which is more conducive to the implementation of the "tunneling ".And on the other hand,the imperfections of the information disclosure system,the inadequate supervision makes the tunneling cannot be effectively curbed.(3)This study finds that SaiXiang's actual controller had the intention of the tunneling early.The block trade platform is used to cover tunneling and preferential taxation policies are used to avoid taxes of selling shares.This case highlights existing problems in many aspects in our country's capital market.Therefore,regulators should speed up the implementation and enforcement of the relevant legal system,investors should establish the correct investment philosophy,and institutional investors also should enhance moral consciousness to promote the healthy development of the capital market.