Study On Yunnan Baiyao’s High Dividend Payout Policy After The Hybrid Reform

Dividend policy is a crucial part of corporate management,involving the distribution and retention of corporate profits,as well as the future business development of the company.At the same time,dividend distribution needs to balance corporate development and shareholder interest protection in order to resolve the conflicts between different interest holders.Cash dividends are one of the main ways for investors to receive returns.Developing a reasonable cash dividend policy can promote the company’s development and investors’ returns,while improving the company’s image and increasing its brand value.A growing number of scholars have focused on the fact that agency problems and information asymmetry,factors that have a significant impact on corporate cash dividends,are related to the country-specific institutional context.China formally proposed a mixed ownership reform policy in 2013,which has now become a hot topic today.The introduction of non-state capital into state-owned capital reduces government control over state-owned enterprises and allows state-owned enterprises to compete fairly with other enterprises in the market.The mixed ownership reform has led to changes in the shareholding structure and top governance structure of SOEs,thus affecting the allocation of resources within the enterprise,and with it,the problems of financing constraints and agency conflicts.The entry of non-SOEs can improve corporate governance and reduce the self-serving behavior of state-owned shareholders who take advantage of information asymmetry situations,which in turn affects the level and propensity of firms to pay cash dividends.This paper uses a combination of comparative analysis and case studies,through which it finds that Yunnan Baiyao successfully implemented mixed ownership reform by increasing its capital and introducing two private enterprises,Xinhuadu and Jiangsu Yuyue,in stages,which broke the absolute discourse originally held by the state and formed a diversified shareholding structure,and the changes in the shareholding structure after the mixed reform had a positive impact on checking management’s self-interested behavior and reducing agency problems,etc.The change in the equity structure after the hybrid reform has had a positive impact on checking management’s self-interest and reducing agency problems,and the synergistic effect between private enterprises and state-owned enterprises has also led to improved corporate performance and high payout performance.A comparison with the same industry reveals that Yunnan Baiyao’s cash dividend distribution has increased significantly after the hybrid reform and has been at a high payout level,reaching a distribution plan of RMB 39 per 10 shares in 2020,which is among the highest among listed companies in the same industry.This paper analyzes the economic consequences of Yunnan Baiyao’s excessive cash dividends from three aspects: R&D investment,market reaction and corporate value,and finds that Yunnan Baiyao’s high payout has been compressing the cost of R&D investment and has not helped much in enhancing corporate value,and,through the event study method,finds that the market has a negative attitude toward Yunnan Baiyao’s large dividend distribution behavior in 2019 and 2020.As investors become more rational,they can form their own judgments about the high cash payouts of listed companies.When it is foreseen that such behavior is not conducive to the company’s future long-term development,high cash payouts will not lead to higher share prices.