Does high dividend payout protect investors? — A case study of Chihong Zinc & Germanium

Abstract

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.

Keywords

nontradable shares reform / expropriation / dividend payout