The Influence Of Cash Dividend Policy On Stock Price Of Listed Companies In Pharmaceuticaland Bio-technological Industry

Earlier this year,pharmaceutical and bio-technological industry became the hottest industry due to the COVID-19 situation.As a matter of fact,this industry has received lots of attention from investors because of the development of technology and the aging problem in China.Once the investors decide to invest in this industry,they will start to consider the profit-distribution problem.This paper aimed to figure out the effect of Cash Dividend policy on the stock price of the listed companies in pharmaceutical and bio-technological industry from the perspective of short term and long term.At the end of this paper,recommendations were made for those listed companies and investors to make a better decision.First,Event-Study Methodology was used in the short-term studies.By calculating the abnormal returns and the cumulative abnormal returns of 275 samples chosen from year 2017 to 2019,this paper studied the market response led by the implementation of Cash Dividend policy during a certain period.The result indicated that the implementation of Cash Dividend policy would cause a negative effect on the stock price.Second,in order to study the long-term effect of Cash Dividend policy on stock price,regression analysis method was used to test the factors which were considered relevant to the stock price volatility.The test result showed that stock price volatility was negatively related to the dividend payout ratio,debt paying ability and the size of the companies.The further research indicated that a company with a high dividend payout ratio or a low asset-liability ratio or an above-average scale can always get a positive feedback from the stock market when it announces a cash dividend plan.