| Cash dividends,a manner of payback to shareholders,transmitting the signal of company's performance to the public,has long confused the scholars for its validation.The previous researches on signal transmission of cash dividends which sporadically got off track were less satisfactory.Firstly,I analyze the current situation of cash dividends paid by our listed companies.In the circumstance where laws are getting bolstered and supervision are increasingly strict,the situation of cash dividends tends to be better than any before.The number and occupation of listed company paying cashing dividends,whose amount is also enlarged,are steadily rising.All these conditions have laid a consolidated foundation for the study on cash dividends signal transmi ssion.In my opinion,any behavior effectively transiting whatever signal in information asymmetry shall be clear as well as hard to imitate.Whereas,the percentage of cash dividends is routinely decided by multiple factors,itself containing various asymmetry information,which,in turn,reversely brings information asymmetry to the signal.Obviously,signal tends to forfeit validation if we judge the annual performance merely by the level of cash dividends.Hereby I deeply analyze the essence of cash dividends so as to take the view that cash dividends can only serve as a signal of performance when three factors are simultaneously considered,the timing of its announcement its level and the company's financing.In detail,the company who would like to predict its cash dividends usually are more confident of its performance and want to attract attention from equity market.The prediction gives equity market more time to study the situation of the company,positively decreasing the cost for investors to sear ch for relevant information and the information asymmetry.Therefore,prediction for cash dividends is a good signal to reflect company's healthy operation.Bhattacharya model are used to describe the enhancement on stock value brought by high cash dividends.Only the company with excellent achievement can undertake the high cash dividends which are hard to imitate by other companies,in that this kind of cash dividends rate are bound to heavily stress the company with discontent operation in the next fiscal year and cause too large cost for them.In result,high and inimitable cash dividends shows its wonderful characteristic to be a significant signal to reflect company's good condition.As to other companies,financing situation are needed to solve the information asymmetry in cash dividends.The profit retained by company are mainly utilized to develop itself in the future.External financing can efficiently help investors to assess whether company's ROE is higher than necessary yield.Three stock price-cash dividends rate models are innovatively established to describe the influence on cash dividends signal transmission imposed by external financing.In data demonstration,listed companies in China in 2015 were used as samples and divided into 5 groups: group of prediction for cash dividends,group of high cash dividends,group of ordinary cash dividends offered by company with negative external financing,group of low cash dividends offered by company with negative external financing,group of ordinary and low cash dividends offered by company with positive external financing.Based on the event study,I toke a research on the AR and CAR of stock prices after the 5 group announcing the cash dividends.Consequently,group of low cash dividends offered by company with negative external financing showed negative AR and CAR.Group of prediction for cash dividends,group of high cash dividends and group of ordinary and low cash dividends offered by company with positive external financing showed positive AR and CAR.Group of ordinary cash dividends offered by company with negative external financing showed ambiguous AR and CAR.These results were highly consistent with what stated in theoretical part of the thesis.The last charter gives recommendations on improving the effect of cash dividends signal transmission from the perspectives of investors,listed companies and regulators.Investors shall establish the sense of cash dividend distinction,vet the proposal of cash dividends from various perspectives and profoundly consider the “three factors” to judge the stock price precisely.Companies with wonderful performance shall actively predict their cash dividends to attract more poorly informed investors,reduce their own information asymmetry and rise their equity value.Regulators shall secure the right of minority shareholders.It is suggested that minority shareholders be able to veto obviously unreasonable proposal of cash dividends.Such measure will oblige listed companies to apportion reasonably high cash dividends.Regulators shall keep tracking company's new investment,protect the interest of external financing and enhance the corresponding capital providers' confidence.That will encourage more external capital providers to join new investment,which reinforces the effectiveness of cash dividend signal transmission. |
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