Research On The Abnormal High Cash Dividends Of Ningbo Huaxiang From The Perspective Of Controlling Shareholder’s Expropriation

The formulation and implementation of dividend policy is an important link of enterprise management,and the formulation of reasonable dividend policy is very important for the sound development of enterprises.The level of dividend distribution directly affects the cash flow of the enterprise,thus affecting the investment,financing and operating conditions of the enterprise,and ultimately related to the long-term development of the enterprise.As the capital market is not perfect,the single-share monopoly and the protection mechanism of small and medium-sized investors are not perfect,which provide the conditions for the controlling shareholders to seize the interests through the high dividend.In 2021,Ningbo Huaxiang Electronics Co.,LTD.’s ultra-high proportion of cash dividend behavior has aroused wide attention in the capital market.This thesis mainly examines the reasons,implementation conditions and economic consequences of Ningbo Huaxiang’s abnormally high cash dividend.This thesis firstly combs the relevant literature on the influencing factors of corporate dividend policy,the controlling shareholder’s interest encroachment and the economic consequences of high corporate dividend payout.Then,based on the principal-agent theory,the information asymmetry theory and the private interest of control theory,combined with the institutional background of the high concentration of equity in Chinese capital market,the imperfect corporate governance mechanism and the imperfect protection mechanism of minority shareholders,etc.This thesis constructs an analysis frame of the motivation,implementation conditions and economic consequences of controlling shareholders’ interest encroachment in Ningbo Huaxiang.Then,using the methods of theoretical analysis and event study,this thesis systematically investigates the motivation,implementation conditions and economic consequences of the abnormally high distribution of Ningbo Huaxiang from the perspective of controlling shareholders’ interest encroachment.The results show that:(1)The main motivation of Ningbo Huaxiang’s abnormally high allocation is to reduce the issue price of the controlling shareholder’s private placement,and to provide financial support for the controlling shareholder’s participation in the private placement,so that the controlling shareholder grabs the right of control at a low price and damages the interests of minority shareholders;(2)The dominance of a single share,the vertical concurrent position of senior executives and the weakening of the supervisory role of the board of directors provide the implementation conditions for the controlling shareholder to implement the benefit embezzlement through the abnormally high allocation;(3)The short-term cumulative abnormal return rate(CAR)and long-term buying and holding abnormal return rate(BHAR)of Ningbo Huaxiang abnormally high dividend are negative,and the asset management efficiency,profitability and development ability of the company after the abnormally high dividend show a declining trend,indicating that Ningbo Huaxiang abnormally high dividend does damage the interests of minority shareholders.Finally,based on the research conclusions,this thesis puts forward relevant suggestions for the regulatory authorities,listed companies and small and medium investors.In this thesis,the motivation,implementation conditions and economic consequences of abnormally high cash payout of Ningbo Huaxiang were investigated from the perspective of controlling shareholders’ interest encroachment,which enriched the relevant literature on the motivation of abnormally high cash payout of enterprises,deepened the understanding of controlling shareholders’ interest encroachment methods,and in practice also provided a reference for stakeholders to re-examine the problem of listed companies’ cash dividend.