Analysis Of Motive And Effect Of Dividend Policy Of Gree Electric Appliance

As one of the three major decisions of modern enterprise financial management,dividend policy plays a huge role in enterprise operation and development.Its formulation and implementation not only relate to the vital interests of shareholders,creditors,management and other parties,but also have an impact on the company’s capital structure and future development.Since 2000,China’s capital market system construction and regulatory policies have been increasingly improved,and the level of market allocation has improved significantly.In 2020,more than 70%of companies in the A-share market implemented distribution,and the total amount of dividends exceeded one trillion yuan for four consecutive years.However,with the rapid development of the market,the internal distribution mechanism is not reasonable,the distribution among industries is not balanced,the phenomenon of "iron cock" and super power dividend co-exists,the dividend type is single,and the overall average payout rate is low.Therefore,it is urgent to perfect dividend policy research and standardize the distribution behavior.Gree,as a leading enterprise in the household appliance industry,has a high market share in the main air conditioning business,strong innovation capacity,obvious competitive advantages.In the capital market,it has adopted a high dividend policy for many years,and the dividend payout rate is far higher than the average level of the industry,which is highly sought after by investors.Moreover,its dividend policy has the characteristics of continuous high dividend payout and occasional low dividend,which is very typical.Therefore,taking Gree Electric Appliance as a case to analyze the motivation and economic effect of dividend policy formulation has certain representativeness and practical significance.In terms of structure arrangement,this paper first read and sorted out relevant literature,and summarized the existing research results and the development of dividend policy theory;Secondly,it introduces the basic situation of Gree,divides the development stage of the company according to the life cycle theory,discusses its dividend policy,and finds that the distribution policy adopted by Gree has the characteristics of high obvious dividend,unstable payment rate,etc.Then it analyzes the basic distribution of A-share market and household appliance industry,and compares the dividend policies of Gree,Midea and Haier from financial factors and non-financial factors.Then from the internal and external perspective,explain the motivation of Gree’s long-term high dividend and occasionally low dividend,and analyze the correlation among the largest shareholder,growth ability and dividend payment;Finally,based on the signal transmission theory and principal-agent theory,this paper analyzes the economic consequences of Gree’s dividend policy from the perspectives of market reaction,company value and investment efficiency,and puts forward relevant suggestions based on the research conclusions.The research finds that internal factors such as strong profitability,low debt constraints,equity structure and few investment opportunities of the company,as well as external factors such as changes in the macro environment,promotion of regulatory policies and changes in the industry cycle are the motivations for Gree to adopt the high cash payout policy.The trade war between China and the US,accumulation of development capital and diversification of development strategy are the reasons for the abnormally low payout policy in 2017.At the same time,Gree’s dividend policy formulation supports the cash flow hypothesis.In terms of the economic consequences of the dividend policy,the research results show that Gree’s usual high-dividend dividend policy has not always been understood by investors.In 2010,2013 and 2019,the high cash dividend distribution has led to the decline of the company’s stock price,and the excess return rate is negative,which violates the signal transmission theory.Improving the stability of cash dividend distribution has a positive effect on corporate value.Although increasing cash distribution is not conducive to company value,it can improve investment efficiency,reduce agency cost and support principal-agent theory.