High Stock Dividend And Major Shareholders Reduce Their Holdings

In 2015,high dividend stock was a hot topic in China,a plenty of investor prefer to buy the stock which has announced high dividend policies and 19 companies had sent 20 shares to every 10 shares,which is rare in the world.Although in theory,this kind of behavior which is similar with the stock segmentation just increased the number of shares,did not bring any influence to the company's operation and the value of the shares held by investors did not change,in the Chinese stock market,this kind of stock policy can cause very strong positive effect,pushing up prices.From the aspect of investors,it is easy to think that the high transfer stock is worth investing while ignoring the basic analysis by obtaining the abnormal returns from the high transfer stock.This creates an opportunity for some strong stock holders to reducing holding shares at high price by pushing up share prices through a high transfer scheme that is not in line with the company's situation.In the early wave of this kind of stock policies,regulators lack of strict supervision,and therefore the company has chance to mislead investors by nonstandard announcement,which encroach on the interests of investors.The article also introduced the classic case of Hairunguangfu as reference analysis,warning readers,for information disclosure in loose requirements is a serious consequence,investors should be rational when in the face of the high dividend stocks.In 2015,only Hairunguangfu got the punishment from the regulators.However it is not meaning only this company has the problem that dividend policies not in line with the company's situation.Many companies used the fuzzy boundary of information disclosure regulation,implemented unreasonable dividend plan,and manipulates the company's stock price to gain interests.Therefore considering based on profitability,growth,stock dividend ability,writer choose the case of Saixiangkeji to study the relationship between the two behaviors which are high dividend and the reduce of holding shares of strong shareholders.This paper sorts out the whole process of the case and selects the key point of the event process to study the event effect.The results show that there is a significant positive market effect on the profit distribution announcement day and dividend elimination day.Next take critical factors such as company operating risk,enterprise life cycle,rubber machinery industry prospects,the company dividend policies history,the company's articles of association and the existing mainstream theory into the analysis in order to study rationality and motivation of its dividend policies.Results show that both the profitability and growth ability of the company is not good which does not match with its high dividend policies.Therefore the information transfer hypothesis cannot be the explanation of its high dividend behavior.As for the optimal price hypothesis,it is also not reasonable explanation because the price per share of this company is in the middle level of the securities market.Besides,equity expansion hypothesis cannot be reasonable explanation as well because the company's performance is not good enough to support its equity scale after they divided the shares.Thus,it is impossible for the corporation to refinance by the way of dividing the shares,which means that the purpose of equity expansion was failed.Eventually,combine the characteristic of this case such as the profitability and growth ability not matching the dividend plan,company's performance not matching with the scale of equity,the company was controlled by Zhangjianhao,the use of money gained from reducing stocks is not clear and the biggest winner in the high dividend behavior is the same person who proposed the strategy of high dividend,we draw a conclusion that in this case,high dividend policies is likely to be the mask of reduction of stocks for strong share holders.Getting revelation from the study,I give out suggestions in three aspects in order to help rule the high dividend behavior in Chinese securities market.The first revelation is standing on the angle of investors.I conclude some characteristic for investors to help them recognize the purpose of high dividend policies.The second revelation is that we can improve the self-government ability by fixing some clauses of company's articles of association.The last suggestion is for the regulators,I suggest that we can add some contains which is mandatory for disclosure when a company is about to do high dividend policies,which can offer more crucial information to alarm the investor that they need to notice to risks under high dividend behavior.And therefore,in this way,regulator can regulate the high dividend behavior effectively.