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The Influence of Fair Value on Dividend Behavior and the Reaction of Stock Price

Author: GuanYing
Tutor: LiuBin
School: Chongqing University
Course: Accounting
Keywords: Fair value Dividend Distribution Stock price reaction
CLC: F224
Type: Master's thesis
Year: 2011
Downloads: 173
Quote: 0
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Abstract

Fair value accounting refers to the accounting model as the main basis of measurement of assets and liabilities at fair value. February 15, 2006, China issued at fair value using the biggest highlight of the new accounting standards system. The standard system promulgated and implemented, especially in the fair value of moderate and cautious introduction of financial and accounting information will be changed to some extent the traditional basis of measurement of impact on the profits of listed companies structure. The basic meaning of fair value can be interpreted as \Different countries and different organizations for the definition of fair value is not exactly the same. The International Accounting Standards Board believes that fair value is familiar with the situation, willing parties in an arm's length transaction, for the amount of an asset could be exchanged, or a liability settled. The changes in fair values ??is a very important part in the fair value accounting. The new accounting standards set \The balance sheet date, in order to calculate the current year's operating results, and finally you want to transfer the balance of the \The changes in fair values ??exacerbated by inconsistencies between the accounting profit and cash flow. Of general interest, if the changes in fair value profitable to raise or lower, then this part of the change will affect the distribution of cash dividends, the announcement of the dividend distribution plan will affect the stock price. This article aims to analyze the relationship of the change in fair value gains or losses on corporate cash dividend, and the resulting changes in market behavior, the reaction of the implementation of fair value accounting standards, corporate cash dividend and stock price behavior on the cash dividends . Firstly, the theoretical support of the thesis statement: the theoretical basis of the fair value of the study, reviewed the use of fair value at home and abroad, and introduces the theory of dividend distribution. On this basis, the fair value impact on dividend policy of the theoretical analysis. Then, this paper is deep, Shanghai and Shenzhen listed companies in 2007, data on corporate cash dividends and corporate fair value changes in the relationship between profit and loss for empirical analysis. The empirical results show that the fair value of a certain role to play in the decision-making process of the corporate cash dividend distribution, have a significant positive correlation, but with the changes in fair values ??of the net profit ratio increased significantly weaker the . Secondly, on the basis of the first part of the study, the use of event study methodology, empirical analysis of the distribution plan announcement near the cumulative average excess return, to study the reaction of the stock price for the cash dividend distribution behavior. The study found that greater than operating cash flows of the company for cash dividends, the cumulative excess return rate was significantly negative, especially for changes in fair value is negative, companies with negative operating cash flows, the market to show a stronger, more durable negative reaction. Thus, the investor is able to recognize three types of cash dividends is no cash support, the market performance of the three types of the company's cash dividend distribution plan for a strong negative reaction. Finally, the combination of the current fair value of the distribution of corporate profits in the country's development situation and the main research conclusions, make recommendations accordingly. Through this study, our fair value after the implementation of corporate dividend behavior change and stock price reaction empirical evidence, which fill the fair value accounting standards after the implementation of changes in business and market behavior has important theoretical and empirical gaps value. Dividend distribution policy, but also for enterprises to develop the Government to regulate the accounting standards provides a theoretical basis, has important practical significance.

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