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The Chinese Stock Dividend Puzzle

Author

Listed:
  • Rulu Pan
  • Xiangxi Tang
  • Yanyan Tan
  • Qiaoqiao Zhu

Abstract

In this paper, we examine the announcement effects of dividends with an emphasis on stock dividends in China's capital market. We find that dividend-paying stocks exhibit significantly positive abnormal returns while non-dividend-paying stocks show a negative announcement effect. Further, we document that the cumulative abnormal returns for pure stock dividends and combined dividends are the main drivers of this announcement effect. In contrast, pure cash dividend stocks experience no significant price run-up before announcement. The significant announcement effect of stock dividends is robust to controlling the earnings surprise effect. We offer some discussion of the possible explanations.

Suggested Citation

  • Rulu Pan & Xiangxi Tang & Yanyan Tan & Qiaoqiao Zhu, 2014. "The Chinese Stock Dividend Puzzle," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 50(3), pages 178-195, May.
    • Handle: RePEc:mes:emfitr:v:50:y:2014:i:3:p:178-195
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    Citations

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    Cited by:

    1. Jiankun Peng & Hao Fan & Hongwen He & Deng Pan, 2015. "A Rule-Based Energy Management Strategy for a Plug-in Hybrid School Bus Based on a Controller Area Network Bus," Energies, MDPI, vol. 8(6), pages 1-21, June.
    2. Mancheri, Nabeel A., 2015. "World trade in rare earths, Chinese export restrictions, and implications," Resources Policy, Elsevier, vol. 46(P2), pages 262-271.
    3. Binghui Wu & Tingting Duan, 2019. "Nonlinear Dynamics Characteristic of Risk Contagion in Financial Market Based on Agent Modeling and Complex Network," Complexity, Hindawi, vol. 2019, pages 1-12, June.
    4. Kumar, Satish, 2017. "New evidence on stock market reaction to dividend announcements in India," Research in International Business and Finance, Elsevier, vol. 39(PA), pages 327-337.
    5. Irina V. Berezinets & Liliia A. Bulatova & Yulia B. Ilina & Marat V. Smirnov, 2019. "Reactions of emerging stock markets to dividend announcements during economic growth: evidence from India and Russia," Eurasian Economic Review, Springer;Eurasia Business and Economics Society, vol. 9(1), pages 71-89, March.
    6. Yuanyuan Yang & Shuwen Zhang & Dongyan Wang & Jiuchun Yang & Xiaoshi Xing, 2014. "Spatiotemporal Changes of Farming-Pastoral Ecotone in Northern China, 1954–2005: A Case Study in Zhenlai County, Jilin Province," Sustainability, MDPI, vol. 7(1), pages 1-22, December.
    7. Fakhrul Hasan & Umar Nawaz Kayani & Tonmoy Choudhury, 2023. "Behavioral Risk Preferences and Dividend Changes: Exploring the Linkages with Prospect Theory Through Empirical Analysis," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 24(4), pages 517-535, December.

    More about this item

    Keywords

    earnings surprise; stock dividend;

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