A Study on Market Reactions to the New Policy on Mandatory Cash Dividends

Li Qiucheng

Xi'an International Studies University

Abstract：

Against the policy backdrop of the new policy on mandatory cash dividends issued by the China Securities Regulatory Commission on March 15, 2024, this paper examines the overall market reaction while conducting a comparative analysis of market performance between traditional industries and strategic emerging industries. The study finds that the new dividend policy can protect investor interests to a certain extent, and the overall market reaction is positive. Further analysis reveals that, against the backdrop of promoting the development of new-quality productive forces, the policy, on the one hand, alleviates agency problems in traditional industries, facilitates the transformation and development of enterprises toward new-quality productive forces, and enhances corporate value, resulting in a positive market reaction; on the other hand, it exacerbates capital shortages and financing constraints for enterprises in strategic emerging industries, hindering their innovative development, resulting in a negative market reaction. This paper measures the economic consequences of the mandatory cash dividend policy from the perspective of immediate changes in corporate value in the capital market, providing a basis for the government to further advance and refine this policy.

Key Words：

mandatory dividends; event study; new-quality productive force