Study On The Information Content Of Dividend In China

The Dividend Information Connotation Hypothesis means that in a real and imperfect market environment,the company's managers hold internal information that the outside investors do not know,such as the company's future investment opportunities,future operating conditions,and future profitability.This kind of internal information owned by managers can be transmitted to investors through changes in dividend policy,thereby reducing the level of information asymmetry in the market and allowing investors to identify high-quality companies to influence investors' decisions.This paper mainly studies the validity of the dividend information connotation hypothesis in the Chinese market,that is,whether the change of dividend policy can provide new information to the market and trigger the change of the company's stock price.The empirical results show that in China,the unexpected increase in cash dividends of listed companies can lead to a positive excess return rate during the dividend announcement period,and can convey to the market information on the company's profitability improvement in the next few years,with significant signal functions.The paper also finds that the signal function of cash dividends for companies with abundant funds is more significant,while companies with insufficient funds may use cash dividends to deliver false information.The cash dividend policy not only conveys the company's future earnings information to the market,but also transmits relevant information about future investments.Further tests found that for listed companies whose dividends have exceeded the market expectations,the value effect of their dividend signals is even greater.In the developed capital market,dividends are not only the main way for listed companies to return investors,but also an important source of income for investors.China's capital market has a short development time.There is a certain gap between the market environment,the operating mechanism,laws and regulations and the developed capital market.In China's capital market,listed companies have long-term profits without dividends,low cash dividend returns,and often have unusually high dividend distribution,eager to issue stock dividends,and investors do not pay attention to dividends.In order to protect investors' rights and guide value investment,the regulatory authorities have introduced a series of laws and regulations to regulate the dividend distribution of listed companies,and link the company's refinancing qualifications with company dividends.However,this “semi-mandatory dividend policy” is not effective.ideal.This paper analyzes the information connotation of cash dividends and stock dividends of Chinese listed companies,and conducts empirical tests from the perspectives of future earnings changes and future investment levels,thus providing a certain reference for company managers' dividend decision-making,providing investors with The idea of long-term investment also provides relevant recommendations for the supervisory layer to guide the good development of the capital market.