Large Stock Dividends And Major Shareholders’ Shares Selling

"Large stock dividends" is a tendentious option that the listed companies choose from dividend policies.Compared with cash dividend,stock dividend and stock split are more preferable for some listed companies in China,and therefore,stock dividend and split becomes a widely chosen strategy for the listed companies at each year end.As a matter of fact,"large stock dividends" has a limited effect on promotion of financial situation and managerial level of the listed companies,and will not bring any essential benefits to these companies.However,due to the exceeded attention and speculation from outside,numerous speculative investors are keen on buying such"large stock dividends" concept stocks,and meanwhile a great deal of shareholders of listed companies immediately reduce holding-shares after gaining massive arbitrage without caring about the loses of medium and small investors.Shares selling of shareholders based on large stock dividends occur commonly in recent years.Hence,CSRC begun to pay significant attention to this phenomenon and announced in early 2017 that they would put large stock dividends in strict regulation.The thesis analyzes the case of Yechiu Metal Recycling in order to find out the real motives why Chinese listed companies are inclined to choose large stock dividends policy and the impacts will be brought into the market.The thesis on the analysis of large stock dividends has practical significance and research value and can provide references to both regulators and investors.After consulting numerous relative theories on large stock dividends and shares-selling of shareholders,combining with the development and present situation of large stock dividends in China,the thesis deeply analyzes four main motives why Chinese listed companies implement large stock dividends policy:signal transmission,stock liquidity,equity scale and governance structure of company,and the market effects of this policy.Based on Yechiu Metal Recycling case,the thesis in-depth analyzes its capability of large stock dividends,the effect of large stock dividends announcement on stock price volatility,and the correlation between large stock dividends and behaves of shares-selling of shareholders,and concludes that the actual motive is arbitrage rather than equity expansion and stock liquidity demand mentioned in its announcement.Besides,investors’ preference is also a causation to apply large stock dividends policy.In the last part,this thesis conducts a summary analysis to the results of the research and suggests that China’s regulators must develop an appropriate mechanism which is grounded in China’s practical situation of large stock dividends.Besides,investors should make reasonable investment decisions only after a deep research.