A Study On The High Stock Dividends Policy And The Insiders Reduction Of Listed Companies In China

The obvious characteristic of the dividend policy of Chinese listed companies is high stock dividends policy.Along with the universality of the phenomenon of high stock dividends policy,there are also many insiders of companies who reduce their shares before or after the implementation of high stock dividends policy.During the period from 2014 to 2017,a total of 137 companies existed in this situation.Is there any contingency that the behavior of reducing shares of insiders before or after the release of the company's high stock dividends policy,or is there any connection between high stock dividend policy and the reduction of insiders?Firstly,this paper introduces the universality of high stock dividends policy to Chinese capital market and there are many insiders reducing their shares before or after the implementation of high stock dividends policy.In response to this phenomenon,This paper selects one of the most representative case of HareonSolar.After this,paper will introduce the causes of high stock dividends policy in domestic and abroad,then based on the theory of insider trading and the motivation of high stock dividends theory,paper uses exclusion method to analyze the specific case of Hareonsolar to find the motivation of high stock dividend policy.Then,this case is further analyzed of the occurrence of this unreasonable motivation.At last,this paper conducts a general rule analysis of these 137 companies,including the company's environment,operating conditions,valuation and regulatory intensity,to supplement and extend the results of case studies.This article draws the following conclusions:(I)The insiders of Hareonsolar knew that the company's annual profit was a huge loss before the implementation of high stock dividends policy and the obvious operating conditions,there was a strong incentive to withdraw from photovoltaic industry.Using the irrational preference of capital market for high stock dividends policy,the insider carried out it to increase stock price and thus reduce their shares.(2)Catering Theory of Dividends can be used to explain that the insiders of Hareonsolar issued high stock dividends policy for reduction plan.When external investors are more inclined to high stock dividends policy,the insiders propose that the company should implement high stock dividends policy and hide the company's real operating conditions to increase the valuation of stocks in the short term,which can help insiders reduce their shares.(3)About the time when the implementation of high stock dividends policy is to shield the reducing shares of insiders,there are three points:First,the market valuation is high.Second,there are two types of companies are more inclined to have this kind of bad motivation.One belongs to the traditional manufacturing industry,the industry is developing slowly,the bargaining power is weak,and the company's operating pressure is huge.The other belongs to emerging industry,which is developing rapidly.The company operates well,but the valuation is high.Third,the supervision of the high stock dividends policy is too loose.In the end,paper puts forward corresponding suggestions from the perspective of the regulators and investors respectively in the hope that the regulators can reasonably formulate relevant high stock dividends implementation standards and strengthen the supervision of high stock dividends policy,the investors can avoid unreasonably high stock dividends policy motivation.