Research On The Causes And Effects Of High Cash Dividends

As one of the important financial policies of listed companies,dividend distribution policy has become a research hotspot of many scholars at home and abroad.The company’s choice of different dividend policies is not only related to the direct economic interests of shareholders,but also has an impact on the company’s future investment and financing policies,which is related to the future development of the enterprise.Before 2000,due to the absence of policy regulations,listed companies were characterized by irregular and arbitrary dividend distribution,and most companies adopted a low dividend or even zero dividend policy.In order to improve this situation,CSRC has issued various policies since 2000 to guide and standardize the dividend distribution of listed companies.Under the encouragement and guidance of these policies,the situation of low or no cash payout of listed companies has improved,and the number of companies participating in cash distribution has increased year by year,and the amount of cash distribution has also increased accordingly.However,with the popularization of cash distribution of listed companies,a series of new problems have arisen.More and more enterprises have experienced abnormally high cash distribution。Abnormal high cash distribution is also called super ability cash distribution,which refers to the behavior of distributing cash dividends beyond company’s own profit level or ability to generate cash flow.Abnormal high cash distribution can bring high returns to investors in the short term,but in the long term,it will make the company short of funds,which increase the financial risk.In this context,this paper takes the research technique which the theoretical analysis and the case study unifies,combined with the theoretical knowledge of dividend policy and the case study of Yutong Bus Co.,Ltd.,to discuss the characteristics,causes and economic consequences of high cash distribution,and puts forward some suggestions to standardize the high cash distribution behavior of listed companies.Firstly,this paper systematically sorts out the relevant domestic and foreign research literature on the definition,influencing factors,motivation and economic consequences of high cash distribution,elaborates the theoretical basis of dividend distribution.Secondly,it sorted out the relevant theoretical knowledge and market status of high cash dividends.Combined with specific data statistics,it discusses the overall situation,distribution characteristics and existing problems of high cash dividends in China’s A-share market,and summarize the influencing factors,motivation and harm of listed companies’ high cash dividends in China.On this basis,this article takes Yutong Bus as the specific research object,reviews and summarizes the dividend distribution of Yutong Bus over the years,and analyzes the motivations,objective support conditions and effects of the company’s high cash dividends.Lastly,according to the outcomes of the analysis,strategies and suggestions to prevent abnormally high cash dividends are put forward.The conclusions of this paper are as follows:(1)The main motivation of Yutong Bus’ s high cash dividend is to meet the interests of the controlling shareholders and the management.(2)The objective conditions of Yutong Bus’ s high cash dividend include the guidance of relevant national dividend policies,the financial support provided by government subsidies,the stable development of bus manufacturing industry,the lack of good investment opportunities,and the lack of protection mechanism for small and medium shareholders.(3)The high cash dividend of Yutong Bus will lead to negative economic consequences in three aspects: first,the high dividend payment rate does not bring the rise of the company’s stock price,and the market reaction is flat.Second,frequent high cash dividends make the overall financial situation of the company decline.Third,the Tobin’s Q Ratio of Yutong Bus basically shows a downward trend in the year of abnormally high cash dividend,and does not improve the company’s value.Thus it can be seen that the abnormal high dividend policy is not a rational behavior,and each subject should appropriately improve the excessively high dividend policy and adopt a dividend policy that is conducive to the healthy development of enterprises.