Guided Cash Payout Policy and Firm Value: Evidence from China
Journal of Finance and Accounting
Volume 4, Issue 5, September 2016, Pages: 285-292
Received: Aug. 6, 2016;
Accepted: Aug. 22, 2016;
Published: Sep. 9, 2016
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Yin-Che Weng, Department of Accounting, Harbin Institute of Technology, Harbin, P. R. China
Shiyu Liu, Department of Accounting, Harbin Institute of Technology, Harbin, P. R. China;School of Business, Trinity College Dublin, Dublin, Ireland
Yu Qi, Department of Finance, University of Texas at Dallas, Richardson, USA
Yadi Qin, Department of Finance, Xiamen University, Xiamen, P. R. China
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This study considers the “Guidelines for Cash Dividend Distribution of SSE-Listed Companies” (the “Guidelines”) issued by the Shanghai Stock Exchange (SSE) in January 2013 as an exogenous shock to corporate payout policy and assesses the effect of cash dividends on stock performance. The authorities believe that urging firms to pay out no less than 30% of their annual earnings is attractive to outside investors; however, the study results show that, whereas firms raising dividends to meet the level of payouts in the SSE’s “Guidelines” may gain superior valuation relative to the counterparts in the short term, this effect does not exist in the middle term. In addition, young, growing companies and startups that follow the policy suffer from downsized financial slack and future corporate investment levels. The results contribute to the literature on corporate payout policy and financial liberalization and indicate policy implications for the government of China and SSE-listed firms.
Dividend, Payout Policy, Firm Value, China Market, Regulation
To cite this article
Guided Cash Payout Policy and Firm Value: Evidence from China, Journal of Finance and Accounting.
Vol. 4, No. 5,
2016, pp. 285-292.
Copyright © 2016 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/
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