Research On The Motivation And Consequence Of High Distribution In Auto Parts Industry

Dividend policy is a hot topic of academic research,both in terms of investor interests and the future development of companies.To better protect investors’ interests,the Securities and Futures Commission has introduced a number of new rules that encourage listed companies to raise capital through cash dividends.These initiatives are intended to promote the long-term health of the capital market,while also prompting scholars to look at the motivations behind dividend distributions and analyse the economic benefits they could bring if implemented.Since this company is a leader in the automotive spare parts industry,its study of high cash dividends can serve as an important reference point not only for the development of future cash dividend policies,but also for relevant case studies.This paper first compares the literature on dividend policy in Ukraine and abroad and summarises the main factors that influence the payment of high cash dividends,and then discusses the implications of high cash dividends in this context.Secondly,the actual implementation of the cash dividend policy in the auto parts industry will be analysed,and VIVOTEK will be selected as a case study to summarise the implementation of this dividend policy over the past decade.After that,the motivation of Weifu Hi-Tech to pay high dividends will be investigated from internal and external perspectives,respectively.Finally,the paper uses Tobin’s Q-analysis and event analysis to examine the value and market reaction of Viverco to better understand the impact of the large payout.The paper shows that intrinsic motives such as significant surplus,lower agency costs,and firm maturity,as well as extrinsic motives such as regulatory compliance and positive image,drive Wafer Works to make larger payouts.The analysis of the consequences shows that the large payout did not have a positive impact on the market,but rather exacerbated the phenomenon of irrational capital structure,which led to a decrease in the agency’s efficiency,slowed down the company’s activity level and,to some extent,hindered the company’s development.In addition,the market reaction also suggests that Waffle Factory’s large cash payments did not absorb investment resources and did not play a positive role in the company’s promotion.In conclusion,this paper argues that making large cash payments should take into account the actual situation.On the one hand,the company should make full use of its strengths and improve profitability;on the other hand,it should adjust a reasonable dividend policy,while the government should also improve a strong regulatory approach to protect investors’ interests.