Skip to main content


Does high dividend payout protect investors?

Article metrics

  • 336 Accesses


This paper studies the relationship between dividend payout and investor protection through the case of Chihong Zinc & Germanium’s (Chihong) reform of nontradable shares. Results show that Chihong’s nontradable share reform integrated with equity offering may usurp the interest of small shareholders. Statistics manifest that market responds negatively to this type of dividend allocation. Managerial suggestions are also provided.


以股权分置改革为背景, 研究驰宏锌锗的股利分配行为与投资者利益保护的关系。 结果表明, 驰宏锌锗的分置改革与定向增发导致股利分配有大股东套现和侵占中小股东利益之嫌。 股利分配事件研究的结果表明, 市场呈消极反应。 因此, 提出相关맜理变革建议。


  1. Aharony J, Swary I(1980). Quarterly dividends and earnings announcements and stockholder returns: An empirical analysis. Journal of Finance, 35: 1–12

  2. Asquith P, Mullins D(1983). The impact of initiating dividends payments on shareholders’ wealth. Journal of Trading, 56: 77–96

  3. Bar-Yosef S, Kolodny R(1976). Dividends policy and capital market theory. The Review of Economics and Statistics, 58(2): 181–190

  4. Bhattacharya S(1979). Imperfect information, dividends policy, and “The Bird in the Hand” Fallacy. Bell Journal of Economics, 10: 259–270

  5. Black F(1976). The Dividends puzzle. Journal of Portfolio Management, 2(2): 5–8

  6. Chen Xinyuan, Chen Donghua, Shi Xu(2003). Corporation administration and cash bonus: Study based on the case of Foshan illumination. Management World, (8) (in Chinese)

  7. Chen Zhiwu, Peng Xiong(2001). Discounts on illiquid stocks: Evidence from China. Working Papers, Yale School of Management’s Financial Research Network: 1–44

  8. Crockett J, Friend I(1988). Dividends policy in perspective: Can theory explain behavior? The Review of Economics and Statistics, 70(4): 603–613

  9. Duan Peiyang(2002). Study of the phenomena of high dividends of list companies in 2002. Finance and Economy, (7)

  10. Faccio M, Lang L, Young L(2001). Dividends and expropriation. American Economic Review, 91(1): 54–78

  11. Jensen M(1986). Agency costs of free cash flow, corporate Finance, and takeovers. The American Economic Review, 76(2): 323–329

  12. Jensen M, Meckling W(1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, (3): 305–360

  13. John K, Williams J(1985). Dividends, dilution, and taxes: A signaling equilibrium. Journal of Finance, 40: 1053–1070

  14. La Porta R, Lopez-de-Silanes F, Shlcifer A, Vishny R(2000). Agency problems and dividends policies around the world. The Journal of Finance, LV(1): 1–33

  15. Lan Faqin(2001). Explanation of the features in dividend payout by Chinese list companies through modern economics. Management World, (3) (in Chinese)

  16. Lee C J, Xiao X(2002). Cash dividends and large shareholder expropriation in China. Working paper, Tsinghua University

  17. Lü Changjiang, Xiao Chengmin(2006). Ownership of civil list companies and expropriation behavior-study based on the case of Yangguang Group. Management World, 10 (in Chinese)

  18. Lü Changjiang, Zhou Xianhua(2005). Administration structure of the company and motivation of dividend payout-analysis based on agency cost and expropriation of profits. Nankai Business Review, 3 (in Chinese)

  19. Miller M H, Kevin R(1985). Dividends policy under asymmetric information. Journal of Finance, 40: 1031–1051

  20. Riley J G(1979). Informational equilibrium. Econometrica, 47: 331–360

  21. Rozeff M(1982). Growth, beta and agency costs as determinants of dividend payout ratios. The Journal of Financial Research, V(3)

  22. Shefrin H, Statman M(1984). Explaining investor preference for cash dividends. Journal of Financial Economics, 13: 253–282

  23. Thaler R, Kahneman D(1981). The framing of decisions and the psychology of choice. Science, 211, 453–458

  24. Wei Gang(1998). Case study of dividend payout by list companies in our country. Economic Research Journal, 6 (in Chinese)

  25. Wu Lina, Gao Quang, Peng Yan(2003). Study of influences of abnormal dividend payout by the list companies in our country. Economic Science, 1 (in Chinese)

  26. Yu Minggui, Xia Xinping(2004). Controlling shareholders, Agency Problems and Dividends Policy: Experiential evidences from the list companies in China. China Financial Science, (2)1 (in Chinese)

Download references

Author information

Correspondence to Xianhua Zhou.

Rights and permissions

Reprints and Permissions

About this article

Cite this article

Zhou, X., Lü, C. Does high dividend payout protect investors?. Front. Bus. Res. China 2, 417–439 (2008) doi:10.1007/s11782-008-0025-4

Download citation


  • nontradable shares reform
  • expropriation
  • dividend payout


  • 股权分置改革
  • 利益侵占
  • 股利分配