The Strategic Choice Of The Fund's High Dividend Behavior

Securities investment fund is a collection investment way of benefit-sharing,risk-sharing,it through the public offering to raise investors' money,and through professional fund managers to invest in financial management,so as to achieve diversification,save costs and improve revenue purposes.For funds,the amount of share out bonus is one of the important elements of fund.Reasonable dividend is not only the investor to select fund standards and reference indicators,bring objective cash income,but also a good performance of the Fund's profitability.Then the fund manager to adopt the high dividend strategy,how to influence the interests of fund managers and individual investors,is the focus of this paper.In theory,rational fund managers should increase the rate of return on the fund to attract cash inflows,will try to avoid high dividends.But this paper indicate that managers of small funds and the funds that suffer from low cash flows tend to pay high dividends.From the perspective of high dividends,this paper analyzes the motivation of fund managers to take high dividend and the influence of high fund dividends to investors.This paper selects all open-end equity funds and hybrid funds from 2003-2015 as the research object,and choose the dividend yield in quarter t as the main research variables.According to the data,we find that some funds within a year will be pay dividend many times,but in a quarterly dividends is relatively small.In this case,this paper will accumulate the fund's quarterly dividends and use it as a quarterly dividend event,to study the relationship between fund dividend and net cash flow,future performance,and analysis the relationship between fund dividend yield and TNA,NAV,NCF and other factors.Firstly,analysis of fund dividend yield and the future net cash flow,divided yield is computed as the dividend amount per unit divided by a fund's NAV per unit when the fund distributes dividends in then same quarter.Secondly,study the relationship between the fund dividend yield and the fund future performance,the fund performance measured using three different ways(style adjusted abnormal return,abnormal return based on CAPM model,and abnormal return based on Fama-French three-factor model).Thirdly,analysis the factors that affect the fund's high dividend,mainly based on the size of the fund,the net value of the fund,the net cash flow of the fund over the past year,and the cross between the net value of the fund and the fund size,and the net value of the fund and the net flow of funds.Finally,contrast the individual and institutional investors' fund ownership after pay dividend,individual investor' proportion of fund units and the change of the total number,and analysis individual and institutional investors' sensitivity to the high dividend.The results show that: first,the fund dividend yield and the fund's future net cash flow was significantly positive correlation,the higher the dividend yield,the more future cash flows.Second,the dividend yield and the fund's future performance was significant negative correlation,the funds paying high dividend does not result in high returns,regardless of whether the fund's performance is a style-adjusted rate of return,a CAPM model adjusted rate of return,or a Fama-French three-factor model adjusted rate of return.Third,the factors that affect the fund's high dividend are: the size of the fund,the net value of the fund,the net cash flow of funds over the past year.The fund dividend yield and the size of the fund,the fund's net cash flow over the past year was significantly negative correlation,the fund dividend yield and the net value of the fund was significantly positive correlation.Fourth,individual investors in the fund dividend before and after holding share,share proportion increase obviously,the change of high dividend fund is significantly greater than the dividend yield,and the total number of fund also appears to increase.In summary,the main conclusions of this paper are as follows: firstly,the higher dividend yield,the greater future net cash flow.The high dividends will not reduce the size of the fund,but will attract more net cash flow,and that is benefit for fund managers.Secondly,high dividend yield funds under-perform other funds,high dividend is detrimental for investors.Thirdly,the managers of small funds and the funds that suffer from low cash flows have strong incentives to increase cash flows through paying high dividends,which indicate that managers of small funds and especially those with high paying capacity have strongest incentives to pay high dividends.Fourthly,by comparing the changes in the shareholding of individual investors and institutional investors,found that individual investors are more inclined to high dividends.The results clearly show that the increasing in net cash flows after paying dividend,mainly due to the individual investors.Above all,the high dividend yield is the fund managers' management strategy,namely fund managers use the individual investors irrational behavior to pursuit high dividend,adopt the strategic policy,the purpose is to attract more cash inflow.But high dividend did not bring better performance.High dividends bring benefits to fund managers but unfavorable to fund investors,this could create an agency problem.