Stock Market Liberalization And Dividend Policy

Since the last century,most economists believe that the opening of the stock market can promote economic growth,raise asset prices and improve the level of corporate governance.However,after several financial crises,there are also contrary opinions that financial liberalization may promote speculative activities,and capital inflow and outflow may bring volatility,thus affecting economic stability.In the process of reform,China has been insisting on expanding its liberalization to the outside world.In recent years,many channels for foreign capital to invest in China's stock market have been opened.These measures are based on the theory that the liberalization of the stock market has a positive impact on economic development.Many researchers have explored the impact of this policy,but the impact of the stock market opening policy on the dividend policy has not been fully studied.It is generally accepted that increasing cash dividend can effectively solve principal-agent problems and send a good signal to investors that the company is in good condition.Therefore,capital entering the Chinese market from the mature markets will prefer companies with higher cash dividend and higher dividend level,which will also urge the outstanding public companies to change their former dividend policy,and to improve the dividend level,but this conjecture still needs empirical testing.At the same time,some studies believe that this policy will also significantly affect the level of financing decisions and stock price volatility,which may have some impact on the dividend level.Through empirical analysis,this paper finds that this policy can improve the dividend level and dividend probabilit.This conclusion is still significant after changing samples,placebo tests and using other models,and the effect is more significant for non-state-owned enterprises.We also study the impact of this policy on equity financing decision-making and stock price volatility,and also the possible mediating effect of dividend policy.Finally,we confirm that the mediating effect reduces the positive impact of the policy on dividend policy.And the negative impact of dividend policy through reducing stock price volatility may be caused by information asymmetry.On the basis of the above empirical conclusions,this paper puts forward the following suggestions:(1)The stock market opening policy can significantly improve the dividend probability and dividend level of listed companies,especially the non-state-owned enterprises.It can reduce agency costs,enhance the enthusiasm of market participants to invest in excellent companies,and make the market develop in a healthy direction;(2)Compared with the Shanghai Hong Kong stock connect,the effect of the policy of Shenzhen Hong Kong stock connect on the improvement of the company's dividend level is limited,and the marginal effect is decreasing.This may be due to the impact of Shanghai Hong Kong stock connect on the dividend policy of all listed companies,and on this basis,the impact of Shenzhen Hong Kong stock connect is weakened.It may also be that companies generally have expectations on policies and digest the impact in advance,or it may be caused by the change of demand of overseas investors for Chinese assets.This phenomenon reflects that the impact of policy is weakening with the expansion of opening-up,and the implementation pace of financial opening-up policy can be further accelerated;(3)Market regulators can improve the quality of small and medium-sized enterprises' information disclosure and reduce the phenomenon of information asymmetry by strengthening supervision,which may reduce the impact of policies on small and medium-sized enterprises.