Enhanced disclosure environment and stock dividend/split in China

Guojun Wang, Yuetang Wang, Dan Yang, Lu Zhang and Qingjing Zhu

Applied Economics Letters, 2021, vol. 28, issue 4, 324-328

Abstract: This paper examines changes in firm behaviour around a regulatory change regarding stock dividend/split in China which mandates enhanced disclosure of such activities. Firms announce significantly fewer stock dividends/splits in the enhanced disclosure environment. The enhanced disclosure also improves the link of stock dividend/split activities with firm growth. Investors react less positively to stock dividend/split announcements in the enhanced disclosure environment. The findings suggest that more cautious announcement strategies and more rational investor reactions are consistent with a decline in false signalling.

Date: 2021
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DOI: 10.1080/13504851.2020.1752896

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