The Mystery Of "Tuhao Style" Cash Dividend

In recent years,with the continuous improvement of capital market and the introduction of national policies in succession,more and more listed companies are paying cash dividends,and the amount of cash dividends is also increasing.The high cash dividend has attracted wide attention from all walks of life.Gree Electric Appliances,as one of the leading enterprises in the home appliance industry,has paid cash dividends for 28 times from its listing in 1996,and the cumulative dividend amount reaching 100,928 million.In particular,the dividend rate has been increasing these years.As an important financial decision,the dividend policy has an important impact on the interests of investors,the development of listed companies and the perfection of the capital market.Therefore,this paper takes Gree Electric Appliances as the research object and adopts the case study method to study its cash dividend policy.This paper analyzes the dividend policy of Gree electric appliances according to the logic of “raise the problem-analyze the problem-solve the problem”.First of all,I introduce the case of Gree Electric Appliances,and its dividend policy is clearly defined as a "Tuhao Style" cash dividend policy by comparing its dividend policy vertically and horizontally.So I put forward the core question of this paper: What is the motivation of Gree Electric Appliances’ high cash dividends? What are the consequences of high dividend? Secondly,based on the dividend theory,the motivation of Gree Electric Appliances’ high dividend is analyzed from four aspects,and the conclusion is drawn:based on the signal transmission theory,the motivation is to send positive signals to the market and antimerger strategy.Based on the agency cost theory,the motivation is to deliver benefits to major shareholders and motivate management to reduce agency costs.Based on catering theory of dividends,it is believed that its high dividend is to cater to major shareholders,institutional investors and national policies.Based on the life cycle theory,it is believed that its high share is due to the lack of good investment opportunities in its mature stage of development.Thirdly,the economic consequences of Gree Electric Appliances’ high investment were analyzed from the perspectives of company value and market reaction.Tobin’s Q value is used to measure the company value,and the market reaction is analyzed by the event study method.It is found that under normal circumstances,the dividend policy with high payout can cause positive market reaction and improve the enterprise value,but the excessively high dividend payment rate may cause negative effects.Finally,based on the conclusions,three suggestions are put forward for reference: “make dividend policy by considering various factors comprehensively”,“maintain the continuity and stability of dividend policy”,“make dividend policy rationally”.The main contributions of this paper are as follows: first,it defines the concept of“high dividend policy”;Second,the motivation of Gree Electric Appliances’ high dividend is analyzed from the perspective of dividend theory.Thirdly,it is concluded that higher dividend payout ratio is not better.This study can provide reference for Gree Electric Appliances and other listed companies to formulate and optimize cash dividend policy in the future.