An investigation of the information content of the financial policies of China's listed companies

Abstract

Based on data collected for financial events of Chinaa??s listed companies over 1994-2003, this thesis investigated the information content of cash dividends, stock dividends, transferred capital stocks, and rights issues using event study and regression analysis under the framework of information signaling. The empirical results did not support the main hypotheses implied by the information signaling theory, suggesting that these hypotheses may not be applicable to Chinaa??s case due to the institutional differences, which are discussed in light of our test results. A series of regulatory policies associating the cash dividend distributions with the equity issues were released since 2000. The empirical findings indicate that the new policies, associating the equity issues with cash dividends, have impacts on the managerial behavior to a certain extent. These findings have brought optimism to the effect of the cash-dividend-enforcement policy on improving corporate governance.