Journal Name:
- Journal of Industrial Engineering and Management
Key Words:
| Author Name | University of Author |
|---|---|
Abstract (2. Language):
Purpose: This paper aims to study the remarkable effect of dividends catering in Chinese
stock market, and its significance on dividend policy and investment decisions. Is there a
significant difference in operation status of companies between issuing cash dividend and
those without cash dividend, and which one is the better? Is there a significant difference in
income level of stocks between issuing cash dividend and those without cash dividend, which
one is the higher? Is the irrational preference of cash dividend detracting along with the
development and improvement of securities market? All issues above need the market
inspection.
Design/methodology/approach: Based on related dividend theories and the empirical data
of Chinese securities market, we construct three portfolios including stock dividend, cash
dividend and non-dividend. The paper studies the returns from these three kinds of portfolios
which is analyzed by the least significant difference method, co-integration model, Sharpe
index model, and error correction model, and then finally comes to the conclusions.
Findings: The main finding is that there is significant effect of dividends catering in Chinese
stock market; the income level of cash dividend portfolio is significantly lower than that of
other portfolios; the listed companies issuing stock dividend have a high investment value.
Originality/value: Through collecting a lot of data from the year 2004 to 2009 and
developing models to analyze, the paper deem that whether the earnings growth or not determines the dividend policy of listed companies, and that stock dividend is the natural
choice for those listed companies which have sustainable development advantages.
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