The Influence Of Gree Group's Stategic Adjustment On Dividend Distribution Policy

Enterprise strategy is related to the overall interests and future development of the enterprise.With the change of internal and external environment,enterprise strategy needs to be adjusted dynamically.Strategic adjustment is inseparable from the support of capital,which requires enterprises to develop appropriate financing plans,and then it will involve the adjustment of dividend distribution policy.Both corporate diversification strategy and dividend policy are hot topics for scholars at home and abroad.However,at present,scholars have conducted empirical studies on corporate diversification strategy and dividend policy respectively,and few scholars have conducted comprehensive studies on the relationship between diversification strategy and dividend policy.As a developing country in the period of economic transition,China has special national conditions and institutional background.Therefore,it is necessary to study the relationship between diversification strategy and dividend distribution policy according to China's national conditions and the actual situation of enterprises.In order to maintain sustainable development,Gree Group,an iconic brand enterprise in China's air conditioning industry,will shift its future business strategy from specialized operation to diversification.The 2017 annual report of Gree Group subsequently announced that it would implement the policy of no cash dividend and no accumulation fund for capital increase.Therefore,this paper takes Gree Group's corporate strategy adjustment and dividend distribution policy in 2017 as an example to study the influence of diversification strategy on dividend distribution policy,so as to provide guidance and reference for enterprises to formulate scientific and reasonable dividend distribution policy.This paper combines normative research with case study.In the normative research part,the author reviews and summarizes the relevant literatures at home and abroad,and summarizes the concept,type,motivation and theoretical basis of diversification strategy and dividend distribution policy.In the part of case analysis,on the basis of introducing Gree Group's strategic adjustment and dividend distribution over the years,this paper analyzes the influence of Gree Group's strategic adjustment on dividend distribution policy,summarizes the conclusion and inspiration of Gree Electric Appliances' dividend distribution this time,and puts forward some constructive suggestions for the formulation of the company's dividend policy.The basic framework of this paper consists of four parts:The first part is basic theory research.This part summarizes the research status at home and abroad,analyzes the concept,type and motivation of diversification strategy,and clarifies the concept,type and theoretical basis of dividend distribution policy.The second part introduces Gree Group's strategic adjustment and dividend distribution over the years.First,the basic situation of Gree Group is analyzed.Second,study the process and motivation of Gree Group's strategic adjustment.Changes in the internal and external environment of the enterprise have prompted Gree Group's business strategy to undergo an adjustment process from specialization to diversification,and the diversification strategy is gradually implemented from related diversification to unrelated diversification.Thirdly,analyze the dividend distribution of Gree Group over the years.Gree Group has always adhered to the dividend policy over the years,but in 2017,it changed its previous practice and did not distribute cash dividends.The third part analyzes the influence of Gree Group's strategic adjustment on dividend distribution policy.Firstly,it analyzes the capital demand and capital source channel of Gree Group's strategic adjustment.Secondly,it analyzes and compares the financing costs and financing constraints of different sources of Gree Group's diversified investment.Third,analyze the advantages of Gree Group not allocating cash for diversified investment,including: low internal financing cost;less financing constraints;the program is simple and fast;the shareholder replaces the cash income by the asset income;shareholders pay less income tax.Fourth,it analyzes the disadvantages of Gree Group not distributing cash dividends for diversified investment,including: cash dividends are safer;diversification strategies may bring risks;dividend policy adjustment affects the company's stock price fluctuations.The fourth part summarizes the conclusion and inspiration of Gree Electric appliances not distributing dividend this time.Research conclusions include: Gree Electric appliances does not distribute dividends for diversified investment,which can save financing costs,alleviate financing constraints,reasonably avoid taxes for shareholders and other benefits,but will cause stock price fluctuations.The enlightenment includes: the company should adjust the dividend distribution policy according to the strategic adjustment;when having a good investment project,the company should give priority to the choice of endogenous financing;enterprises should reasonably formulate dividend policies to promote the increase of shareholder wealth;corporate dividend policy should not only consider the increase of shareholders' long-term wealth,but also avoid short-term stock price fluctuations.The main contributions of this paper are :(1)on the basis of summarizing the research literature of domestic and foreign scholars and the theories related to diversification strategy and dividend distribution policy,this paper analyzes the influence of Gree Group's strategic adjustment on dividend distribution policy,reveals the reasons for Gree Group's non-dividend distribution in 2017,and summarizes the economic consequences of Gree Electric Appliances' non-dividend distribution for diversified investment;(2)put forward suggestions on corporate financing and dividend policies to provide reference for enterprises to formulate scientific and reasonable dividend distribution policies.