A Study On The Motivation And Effect Of Fangda Special Steel’s High Cash Dividend Policy

Dividend policy is one of the most important financial policies in modern company management.The formulation of dividend policy not only determines the retention and distribution of a company’s profits,but also affects the future development of the company.In recent years,in response to the relevant policies issued by the Securities Regulatory Commission to reward investors,Chinese listed companies have been paying out more and more dividends.As a result,high cash dividend policies have become a hot topic in academia.Nowadays,China’s economy has entered a new normal and the development speed has changed from high speed to medium speed.This paper takes Fangda Special Steel Technology Co.Based on the theory of dividend policy,this paper analyses the reasons for the high dividend payment policy and analyses the economic impact of the policy,the industry environment and the company’s own situation.It is hoped that this study will be useful for the formulation of dividend policies for listed companies in the steel industry,so that they can be better adapted to the needs of corporate operations and development.In addition,it is hoped that this study can provide reference for investors’ investment decisions.In this paper,we analyse the financial capability,shareholding structure,internal management,life cycle and signaling of the company.We find that the internal motivations for Fangda Special Steel’s high dividend payout include strong profitability,high concentration of shareholding,sufficient cash flow in the maturity period,self-interest of major shareholders and senior management,and positive market signals to enhance investor confidence.External drivers include the reform trend of "deleveraging" and "de-capacity" in the steel industry,and the SEC’s policy of semi-mandatory dividend payment.Through the calculation and analysis of the cumulative excess return,this paper finds that the release of Fangda Special Steel’s high dividend payout policy has caused a certain positive reaction in the capital market,and investors have a positive attitude towards its high dividend payout;through the calculation and analysis of the enterprise Tobin’s Q value,the study finds that Fangda Special Steel’s high dividend payout policy has a certain enhancement effect on the enterprise market value;through the calculation and analysis of the enterprise EVA The study found that Fangda Special Steel’s high dividend payout policy did not have a negative impact on the intrinsic value of the enterprise,but had an increasing effect on the intrinsic value of the enterprise.Based on the current situation of listed companies’ willingness to pay dividends,this paper combines the economic environment,industry background and enterprises’ own development situation,and conducts an in-depth analysis of this case from three levels: macro,meso and micro,making this paper more meaningful for realistic guidance.This paper concludes that although Fangda Special Steel’s good profitability,solvency and sufficient cash flow have provided the financial basis for its continuous high cash payout,and the market value and intrinsic value of the enterprise have increased in the context of its high cash payout,and the market has responded significantly to its high cash payout,Fangda Special Steel’s high cash payout has harmed the rights and interests of small and medium shareholders in the long run,which is not conducive to its long-term development.In the future,Fangda Special Steel should base on the overall situation,fully consider the interests of all shareholders and formulate a scientific and reasonable cash dividend policy based on the actual situation of the enterprise.