Research On The Causes And Market Reaction Of High Cash Dividends

Dividend policy is an important part of the financial decision-making of listed companies.Listed companies need to consider the allocation of net profit or retained.The key is how to weigh the relationship between dividend payment decisions and the company's long-term growth in the future.China's securities market started late and its development is still immature.At the same time,China's economy is in the process of transformation.Therefore,compared with the mature securities market in developed western countries,China's securities market has problems such as information asymmetry and low operational efficiency.Unlike stockholders in mature securities markets who expect stable and sustained returns,most stockholders in China's securities market hold a “speculative” mentality to hold stocks.In the early days,China's securities market generally over-emphasized the listing process and subsequent fundraising behaviors,often ignoring the corresponding returns to investors.Most listed companies held negligence on cash dividends,and some listed companies that chose cash dividends also had lower dividends.Then,with the series of regulatory policies of the China Securities Regulatory Commission,the proportion of listed companies that made cash dividends jumped sharply,and the unique phenomenon of “high cash dividend” also occurred.In this paper,the case study method,with advanced textile and garment enterprises Joeone for the study.Combined with the overall background of China's securities market,it focuses on the feasibility,motivation and markrt reaction of high cash dividend.This paper hopes to provide valuable support for the formulation of dividend policies of other listed companies in China through the relevant experience of case companies.This paper first sorts out relevant literatures related to high cash dividend at home and abroad,and further clarifies the premise of this paper.Secondly,it expounds the related concepts and theoretical foundations of high cash dividend,and succinctly explains the development process and current situation of the high cash dividend of listed companies in China.On this basis,taking Joeone as an example,the specific content of the 7 cash dividends of the case enterprises is discussed in detail,and the characteristics of its dividend policy are summarized.Joeone attaches great importance to giving investors a reasonable return.Since the listing,the continuous cash dividend has been 7 years,and the overall dividend amount has shown an upward trend,showing the stability of the Joeone distribution,and the cash dividend has a certain continuity.Next,the paper starts with the feasibility and motivation of the implementation of the high cash dividends of Joeone.Selecting horizontally-compared listed companies with similar scales in the same industry,combining financial and non-financial factors to analyze the prerequisites for cash dividends.In terms of motivation,combined with the interests of controlling shareholders,Joeone's enterprise life cycle,reducing agency costs and the regulatory requirements of the CSRC,the in-depth analysis of the root causes of Joeone 's high cash dividends.Then in this paper,through the data analysis,the market reaction of Joeone's implementation of high cash dividends was studied.It was found that after the dividend declaration date,the market has positive feedback on the high cash dividend of Joeone in the short term.The relative value of the company is calculated by Tobin Q,which shows that the long-term high cash dividend can increase the value of the listed company.Finally,based on the analysis of Joeone,this paper summarizes the advantages and disadvantages of Joeone's high cash dividends.The superiority of Joeone's high cash dividends lies in the fact that the dividend policy is closely integrated with the life cycle of the company,and can fully consider the daily operation and future development needs of the company.In the design of dividend policy,cash dividends are stable and continuous,and can provide a reasonable return on investment for institutional investors.After financing through corporate bonds,Joeone was subjected to greater external constraints,and under high-intensity supervision,it was able to reduce the incentives for management incentives and supervision,thereby reducing the agency costs between Joeone's management and shareholders.High cash dividends convey a large amount of benefits to the controlling shareholder,and insufficient consideration of the interests of small and medium shareholders is the shortcoming of Joeone's dividend plan.From the case company of this article to all listed companies,this paper makes the following recommendations: First,further improve laws and regulations and effectively protect the interests of minority shareholders.Second,the formulation of the dividend policy needs to fully consider the company's own life cycle and cash payment ability.Third,companies can effectively reduce agency costs and use financial leverage to bring effective improvements to the company's operations.Fourth,the shareholding structure of listed companies needs to be further optimized,and the internal supervision system needs to be improved.Fifth,the dividend policy should be sustainable and stable.