A Comparative Study On Stock Dividend Policy Of Chinese And American GEM

In the 1970s,the Growth Enterprise Market(GEM)was born in America.In the 1990s,the rapid development of science and technology,and the development of high-tech industries urgently needed venture capital support and the exit mechanism of venture capital.Many developed countries established the GEM market in the mid 90 s.Drawing on the experience and lessons of the foreign GEM market,the Chinese government after nearly 10 years of unremitting efforts,and finally in October 2009,the GEM market in the Shenzhen Stock Exchange began operation,the first batch of 28 companies listed Transaction,since then the capital market system of China's securities market was formed by the Shanghai and Shenzhen Board,Shenzhen small board,Shenzhen GEM and the new three board,to facilitate the financing of high-tech enterprises,but also for venture capital to establish an exit mechanism.The NASDAQ Stock Market was established in 1971,and it has more than 40 years of history.The NASDAQ Stock Market has a huge role in promoting the US economic growth and technological development.In February 2006,the President of the NYSE announced that the NASDAQ stock market was divided into three levels:the NASDAQ Global Select Market,the NASDAQ Global Market and the NASDAQ Small Capital Market;the first two defined as the main board market,the third defined as the GEM market.The policy of stock dividend is a kind of dividend policy.The policy of sending shares does not change the shareholders' equity and the total assets and liabilities of the company.It only transfers the undistributed profit of the company to equity account,but it will increase total share capital of the company.While the listed company's transfer share policy is to convert the company's capital reserve to share capital,the total share capital increased,but the company's shareholders' equity and the assets and liabilities stay the same.As China's investors do not distinguish between sending shares and transfer shares,this article collectively referred to as the stock dividend.The stock dividend policy of US listed companies include stock dividend and stock split.Stock dividend is similar to the sending shares of China's stock market.It is the transfer of the retained earnings of the company into the paid-in capital,only the change in the shareholders' equity account.The total equity,assets and liabilities of the company remain unchanged,but increase the total share capital.Stock split is that the original stock is divided into several copies,the company's total equity,assets and liabilities also remain unchanged,while increasing the total share capital.Since stock dividend and stock split are basically the same in capital market,only accounting treatment difference,so this paper divides stock dividend and stock split as stock split research,but also because American listed company divides stock dividend rarely,so when this paper research the NASDAQ small capital markets' stock dividend policy only including the stock split samples.According to the signal theory of sending shares,the policy of sending shares of listed companies should reflect the continuous growth of future net profit.Therefore,the policy of sending shares of listed companies should be based on the continuous growth of future net profit;if the net profit rises,the company's stock price-earnings ratio reducing,then the company's stock price will fill the right;In the other hand,if the company's net profit has not been sustained growth,or even decline,resulting in the company's stock price-earnings ratio increased,the company shares will be affixed rights.In the US stock market,if the listed company's future net profit will sharp rise,the company's management and major shareholders can use the dividend policy to send shares,the other hand,if the company's future will not enjoy high net profit growth and still send shares,The company's share price and total market value will continue to decline and the stock will be abandoned due to the US stock market's delisting system;the company face a great risk of delisting.So there is no future high growth performance support of the sending shares in theUS stock market equals suicidal behavior.Due to China's stock market delisting system is not strict,a considerable part of listed companies after implement the stock dividend policy ignore of the net profit will not sustained high growth in the future,resulting in the expansion of equity capital faster than the company's net profit growth,the result is that a substantial dilution of earnings per share,if the price does not decline,the price-earnings ratio is surprisingly high,if the stock price dropped significantly without delisting risk,then become a junk stock.This paper focuses on the stock dividend policy of the China-US GEM,which aims to verify whether the GEM samples are consistent with the signal theory of the stock dividend or other related theories.Firstly,this paper makes a comparative analysis of the GEMs of China and the US,including the general situation of China-US GEM,the China-US GEM Listing System.This paper makes a comparative analysis of the data of the sending shares of the Chinese and American GEM companies,and then gives a comparative analysis of the differences between the Chinese and American GEMs,and then come to the corresponding conclusions;Finally,the author draws some conclusions and gives some enlightenment and suggestions to the company managers,investors and government regulators according to the conclusion.