Abstract

http://ssrn.com/abstract=1640219
 


 



Stock Dividend Puzzles in China


Hamish D. Anderson


Massey University - School of Economics and Finance

Jing Chi


Massey University - School of Economics and Finance

Chayot Ing-aram


Massey University - School of Economics and Finance

Lu Liang


Massey University - School of Economics and Finance


Massey U. College of Business Research Paper No. 16

Abstract:     
We examine the stock dividend puzzle in China during 1992-2008 by analysing the market reaction, who pays more or solely stock dividends compared to cash dividends and why. In general, stock dividends send a positive market signal which is stronger for larger stock dividends and simultaneous cash dividend declarations. Companies take advantage of this positive announcement reaction when they are cash poor, or have low profitability. In addition, when the overall market underperforms, cash dividends decrease while stock dividends increase significantly. Non-tradable shares are owned by two distinct groups who have different incentives and therefore are likely to prefer different dividend policies. Consistent with this, we find evidence that state-owned shareholders prefer cash dividends, while legal-person shareholders prefer stock dividends.

Number of Pages in PDF File: 49

Keywords: Stock Dividends, China

JEL Classification: G35

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Date posted: July 15, 2010  

Suggested Citation

Anderson, Hamish D. and Chi, Jing and Ing-aram, Chayot and Liang, Lu, Stock Dividend Puzzles in China. Massey U. College of Business Research Paper No. 16. Available at SSRN: http://ssrn.com/abstract=1640219 or http://dx.doi.org/10.2139/ssrn.1640219

Contact Information

Hamish D. Anderson (Contact Author)
Massey University - School of Economics and Finance ( email )
New Zealand
Jing Chi
Massey University - School of Economics and Finance ( email )
Private Bag 11-222
Palmerston North,, 4442
New Zealand
+64 6 3569099 Ext. 84048 (Phone)
+64 6 350 5651 (Fax)
Chayot Ing-aram
Massey University - School of Economics and Finance ( email )
New Zealand
Lu Liang
Massey University - School of Economics and Finance ( email )
New Zealand
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