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Stock dividends policy and liquidity of ex ante announcement: The liquidity hypothesis retest

Zhiqiang Ye (School of Business, East China University of Science and Technology, Shanghai, China)
Zhi Zhang (School of Business, East China University of Science and Technology, Shanghai, China)
Songlian Tang (School of Business, East China University of Science and Technology, Shanghai, China)

China Finance Review International

ISSN: 2044-1398

Article publication date: 17 August 2015

990

Abstract

Purpose

The purpose of this paper is to test the relationship between stock dividends policy and liquidity of ex ante announcement to improve the traditional stock dividends liquidity hypothesis.

Design/methodology/approach

The authors examine a sample of 2,088 which matching stocks between having stock dividends policy and having no dividends policy during 1999-2012 in Chinese listed firms. Using the multiple liner regression, the authors empirically tests the relationship between the possibility, payout ratio and timing choice of stock dividends and the liquidity of ex ante announcement.

Findings

The authors find that the possibility of stock dividends policy has negative relationship with liquidity, and the relationship of stock dividends and liquidity of ex ante announcement is influenced by the time choice of stock dividends.

Originality/value

This paper study the reason of stock dividends policy from the perspective of liquidity and improve the traditional stock dividends liquidity hypothesis.

Keywords

Acknowledgements

JEL Classification — G14, G35, L21

The authors are acknowledging financial support from the National Nature Science Foundation of China (NSFC-71002052; 71262025) and Special Fund in Fundamental Research Funds for the Central Universities. The authors are also grateful to the anonymous referees for helpful comments and suggestions. All errors are of the authors.

Citation

Ye, Z., Zhang, Z. and Tang, S. (2015), "Stock dividends policy and liquidity of ex ante announcement: The liquidity hypothesis retest", China Finance Review International, Vol. 5 No. 3, pp. 258-276. https://doi.org/10.1108/CFRI-09-2014-0076

Publisher

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Emerald Group Publishing Limited

Copyright © 2015, Emerald Group Publishing Limited

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