Stock Dividends And Abnormal Returns:Mediating Effect Of Investors' Attention

The MM theory which proposed by Modigliani and Miller in 1961 is that,if the company maintain the same investment decision,dividend policy would not change the company valuations.Especially compared with the cash dividend,the stock dividend is the adjustment of equity accounts so that can not acquire hard currency and have impact on fundamentals.However,according to the public information of "Xuxiang" case and plenty of studies in previous,the stock dividend,particularly high stock dividend will have significant positive effect on share prices.Because investors' preference for stock dividends,investigators try to explain this phenomenon through loosening some constraints,but it still does not reach a consensus.Therefore,this paper add cognitive resources theory and describe Chinese A-share stock market's stock dividends policies in recent year for studying the relationship between stock dividends and abnormal returns,and to test whether investor attention has Mediating Effect in this relationship.Innovations of this essay are a new sample about stock dividends and two new variables of Investors' attention.This paper proves the more stock dividends,the more abnormal return when A-share listed company claim Pre-announcement of Profit distribution plan,and investors'attention has mediating effect between stock dividends and abnormal return.It is useful and helpful for investors to make decisions and regulator to make rules.