Analysis On The Motivation Of Listed Company Ultra-Ability Dividends Payout Policy And Its Influence On Stock Price

Dividend policy is an important financial activity of listed companies,but at the end of last century,The phenomenon of "enhance financing,neglect dividend" is very prominent in China capital market,since 2001,China Securities Regulatory Commission has issued a series of documents on dividend policy distribution of listed companies to urge listed companies to pay dividends,and tie the refinancing qualifications to cash dividend distribution situation,Marking the beginning of China semi-mandatory dividend era.However,there are also some extreme cases,such as regardless of the size of the net profit,implement ultra-ability dividends payout.In order to maintain the order of the capital market and effectively protect the interests of medium and small investors,Studying and analysing to this kind of company is particularly important,This thesis takes Dong-E-E-Jiao,a listed company in the traditional Chinese medicine industry,as an example to explore the motivation and influence on share prices of the two ultra-ability dividends payout during its declining performance,so as to provide relevant suggestions to enterprises,regulators and investors.Firstly,describing the relevant concepts and theoretical knowledge needed for the research,and then introducing the basic situation and implementation of dividend policy of Dong-E-EJiao.It is found that Dong-E-E-Jiao has a continuous dividend policy.It is a high dividend company,and there are ultra-ability dividends payout in the period of declining performance in the past two years.The main reason of ultra-ability dividend payout is declining performance,There are four main reasons for the decline of its performance: 1.The shortage of raw material donkey skin leads to the rise of cost;2.The rising cost leads to the continuous price rise of products,and excessive stocking of goods in channels leads to the rise of accounts receivable and inventory;3.Low r&d expenditure,traditional sales mode and high sales cost;4.Single product category,single customer group and the sales ceiling is high.In terms of the motivation of ultra-ability dividends payout,there are the following five motives: 1.The sufficient undistributed profits and strong debt paying ability of the enterprise provided fundamental guarantee for the first ultra-ability dividends payout,and the continuous improvement of business conditions further enhanced the confidence of the second ultra-ability dividends payout;2.As the State-owned Assets Supervision and Administration Commission(SASAC)controls the company,it has the motivation to cater to the semi-mandatory dividend policy and establishing a good social image.3.The enterprise is in the mature stage,with abundant cash and insufficient investment opportunities;4.Due to the characteristics of the traditional Chinese medicine industry in which Dong-E-E-Jiao is located,it tends to pay high dividends,and in recent years,ultra-ability dividends payout and dividend rate have increased rapidly.5.It maintains the continuous dividend policy that it has adhered to for 20 years,stabilizes investors’ confidence and raises the stock price,which has been continuously falling due to the declining performance.Finally through the event study found that the market for the two ultra-ability dividends payout policy of one is a negative reaction,and the market for the first time ultraability dividends payout is a reflection of the larger,this is because at the first time of the ultraability dividends payout,the company performance losses of 450 million,and it is unclear whether performance will improve,the company faced multiple problems.And the second ultra-ability dividend payout performance to turn a loss into a profit now,each financial index restores good.Finally,the suggestion of this case analysis is as follows: 1.The company should customize dividend policy flexibly according to its own situation,so that dividend policy can improve the company’s stock price and value;2.ultra-ability dividends payout has both advantages and disadvantages,need specific analysis,should not be considered prematurely is "malignant dividend","benefit delivery";3.Regulatory authorities should require ultra-ability dividends payout companies to strengthen to put on records and disclose information and continue to track,increase the intensity of punishment for malignant dividends,at the same time according to the industry,the company and other fine dividend standards,such as the upper and lower limits of dividend rate,non-continuous ultra-ability dividends payout and so on;4.As investors,they should improve their professional quality in China’s increasingly developed and perfect capital market,learn and understand through multiple channels,and know their rights and obligations as investors.