A Study On Cash Dividend And Interest Delivery After Private Placement

Directional add-issuance of listed companies is usually to expand the operation scale or to raise funds for new projects. But some companies that once complete the Directional add-issuance will tend to immediately hand out cash dividends, resulting in a larger proportion of the available funds transferred out of the company. This behavior weakens the company’s financial support capability for new projects or expanding the operation scale, conflicting with the purpose of directional add-issuance. Since there is so much cash that can be used to offer dividends, why do they refinance to the major shareholders? So we have reason to suspect that the real motive of listed companies’ Directional add-issuance. By participating in the Directional add-issuance in the case of discount subscription and the consecutive cash dividends, the major shareholders not only improve their shareholding ratio, but also let the new shares, which not bring actual output, share the profit. Accordingly, the rights of minority shareholders reduce, which is essentially a transfer of benefits.In this paper, the company conducted a private placement of listed equity refinancing and high cash dividend payment as a starting point. This paper is based on the sample of A-share listed companies which have implemented directional add-issuance or not refinancing from 2010 to 2012 on Shanghai and Shenzhen Stock Exchanges. The research use empirical method to study the relationship between the directional add-issuance equity financing behavior and cash dividend distribution behavior of listed companies, especially under the case of the major shareholders’ participation. The results showed that the Chinese listed companies pay more cash dividends after directional add-issuance completed. Especially, the companies with the large shareholders participating in the directional add-issuance pay more cash dividends to transfer benefits. Participating in the Directional add-issuance and the consecutive cash dividends has become a new route for the major shareholders transferring benefits.Based on the empirical analysis, this paper put forward relevant policy suggestions to promote regulatory authorities strengthen governance to such acts and to make the capital market more standardized.