Analysis On The Motivation And Economic Consequence Of High Cash Distribution In Listed Companies

Dividend policy is an important financial decision of enterprises,which is not only related to the future business development of enterprises,but also related to shareholders,management,creditors and other stakeholders.In recent years,the CSRC has introduced a series of semi-mandatory dividend policy,and advocated listed companies to pay dividends in cash,giving investors a direct return.Therefore,more and more listed companies began to respond to the call of the securities regulatory commission,the high dividend policy is also favored by the market,but at the same time,there are some abnormal high current for beyond their ability.JMC,as an established automobile company,announced in January 2018 that it would pay A special mid-year dividend in 2017,making it the first dividend payment plan for the a-share market in 2018.This phenomenon has attracted extensive attention from the CSRC and investors.Firstly,this paper reviews the literature at home and abroad,expounds the theory of dividend policy and defines the concept of high dividend.Then,the case study method and event study method are used to analyze the causes and economic consequences of JMC’s high payout,and the following conclusions are drawn: policy orientation is the external factor that drives JMC’s high payout,and good solvency is the guarantee for JMC’s high payout.There are three main reasons behind the high payouts,that is,to deliver cash flow to major shareholders,reduce the cost of principal-agent and stimulate the continued low share price.Finally,through the study of its economic consequences,it can be seen that after the high payout,the market reaction is general,the operation is frustrated,the performance declines,and the enterprise value also declines,and the sustainable development ability is affected.This paper takes JMC automobile as an example,which has certain practical significance.By studying the causes and economic consequences of its high cash distribution,the paper puts forward the corresponding Suggestions: listed companies should distribute cash dividends according to their own financial status and development strategy,while maintaining the stability of dividend policy;Investors should be rational about the high current,should not blindly pursue;Companies and government departments should improve the internal and external supervision system and strengthen the protection of minority shareholders.Therefore,this provides some useful experience for JMC and other listed companies in the scientific and reasonable dividend policy formulation,and at the same time,helps small and medium investors to establish a correct investment concept.