Research On The Motivation And Economic Consequences Of High Stock Dividends

Dividend policy is one of the important contents of the financial decision-making of listed companies.With the continuous development of capital market in China,the participants of the market are paying more and more attention to the dividend policy of listed companies.Compared with companies that do not pay dividends or pay less dividends,investors are more inclined to companies that pay more dividends.Some listed companies have begun to implement the "high stock dividends" policy in order to attract investors.The essence of "high stock dividends" is the adjustment of the company’s internal structure of shareholders’ equity.In fact,it does not change the value of the company and the level of profitability,and will not have a direct impact on investor income.However,the announcement of "high stock dividends" tends to attract investors.The concern of the public has led more and more listed companies to choose "high stock dividends" as their dividend policy.However,the business situation of the companies that have launched the "high stock dividends" program is mixed.Some listed companies have launched the "high stock dividends" to enhance their strength in the capital market because of the confidence in their business performance and future prospects.Shareholders use the rising stock price to manage the market value of the "high stock dividends",and the "high stock dividends" is sometimes accompanied by stock issuance or larger shareholders’ selling.Some investors blindly chase after listed companies’ "high stock dividends" because they are unable to distinguish the real reasons for the "high stock dividends" of listed companies,and their own interests are easily harmed.In recent years,"high stock dividends" has always been a hot spot in the capital market.Regulators have attached great importance to the "high stock dividends" behavior in the market,and the supervision has continued to increase until the strictest regulation was issued in 2018.In recent years,"high stock dividends" has always been a hot spot of speculation in the capital market.Regulatory authorities have attached great importance to the "high stock dividends" behavior in the market,and the supervision has been continuously strengthened.This craze slowly subsided until the most stringent "high stock dividends" related regulations issued in 2018.And some companies still implement "high stock dividends" every year.Therefore,the dividend policy of listed companies is worthy of indepth study.Based on the theory of information asymmetry,signal transmission theory and liquidity theory,this paper selects Dalian Insulator’s high stock dividends as a case study,and studies the motivations and the economic consequences of high stock dividends.First of all,the current dividend policy of listed companies in China is mainly cash dividends,but high stock dividends is still a common dividend policy.For the companies with better business performance and development prospects,high stock dividends may be a suitable choice.Although the regulatory authorities continue to increase their efforts,the policies and regulations are becoming more and more sophisticated and the conditions for implementing high stock dividends are relatively high.It is still necessary to prevent individual companies from using high stock dividends to obtain illegal profits and harm the legitimate rights and interests of small and medium-sized investors.Secondly,Dalian Insulator didn’t have the basic conditions for high stock dividends.The main reasons for its implementation of high stock dividends include enhancing liquidity,expanding the size of the company’s equity,gaining information advantage to manipulate stock prices and market value management.Finally,there are excess earnings in the event window period of Dalian Insulator’s high stock dividends and the policy has brought short-term wealth effect.But the company’s performance declined,growth declined and solvency weakened.The policy has not been supported by the financial performance.Through the study of the typical case,it makes sense for other listed companies to formulate and implement the policy rationally,the investment decision-making of small and medium-sized investors and the perfect supervision of the regulatory authorities.