Enhanced disclosure environment and stock dividend/split in China. Issue 4 (23rd February 2021)

• Record Type: Journal Article
• Authors: Wang, Guojun; Wang, Yuetang; Yang, Dan; Zhang, Lu; Zhu, Qingjing
• Is Part Of: Applied economics letters. Volume 28:Issue 4(2021)
• Page Start: 324
• Page End: 328
• Publication Date: 2021-02-23
• Subjects: Enhanced disclosure environment -- stock dividend -- stock split -- China; G14 -- G38; Economics -- Periodicals; Economics, Mathematical -- Periodicals; 330
• DOI: 10.1080/13504851.2020.1752896
• Languages: English
• ISSNs: 1350-4851

Abstract

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.