Research On The Motivation And Influence Of Huachang Chemical’s Unususally High Cash Flow From The Perspective Of Financial Strategy

In recent years,more and more listed companies have started to pay dividends,in which some listed companies have implemented high cash dividend policy.This raises some questions: Is the high cash dividend behavior reasonable? What are the motives of high cash dividend behavior? Does it have any impact on the sustainable development of listed companies? Will it harm the interests of investors? In order to solve the above questions,this paper takes Huachang Chemical,which has implemented high cash dividend behavior 5 times since 2013,as the research object to explore whether its high cash dividend behavior is in line with the development of the company and whether it is abnormal,so as to analyze the impact of abnormal high cash dividend behavior on listed companies.This paper first determines the abnormality of high cash dividend behavior from the traditional determination method,corporate dividend capacity and investment opportunities,and finds that Huachang Chemical has typical abnormally high cash dividend behavior beyond its own capacity in 2015-2016.Although it created positive free cash flow in 2017-2018,it is not in line with the company’s development stage and investment needs,and has abnormality.Then,the motives of Huachang Chemical’s abnormal high cash dividend behavior are analyzed from the perspectives of management and shareholders.Then,this paper explores the impact of abnormal high cash dividend behavior on the company’s sustainable operation and long-term development from three perspectives of investors’ expectation,operation activities and finance activities,taking market reaction,financial performance and financial strategy as the entry point and using event study,empirical approach and Du Pont analysis as research methodology.The results of the study show that abnormal high cash dividend behavior can bring positive market reaction and increase investors’ confidence.However,abnormal high cash dividend behavior does not have a significant impact on the company’s profitability,but affects the company’s capital flow and makes the solvency ability decrease.As a result,the company tends to adopt a stringent credit mechanism to collect its accounts in order to keep its funds in order,resulting in a much higher turnover of accounts receivable.In addition,abnormal high cash dividend behavior can have an impact on financial strategy.On the one hand,abnormal high cash dividend behavior will make the company worry about investment failure and miss investment projects that are beneficial to the company’s development,resulting in an underinvestment situation;on the other hand,abnormal high cash dividend behavior will increase the company’s financial risk,making the company reduce debt financing in order to reduce the risk.This study aims to provide some reference for companies to formulate a more reasonable dividend policy in line with their own development,and to provide some policy suggestions for regulators,so as to promote further regulation and improvement of the securities market.