Dividend Regulation under China's 2024 "Nine National Guidelines" and Stock Price Reactions: An Event Study

Abstract

Cash-dividend regulation can affect corporate payout decisions and investors' assessments of firm quality. This study examines short-term market reactions to the State Council's 2024 "Nine National Guidelines," which strengthened oversight of listed companies' cash dividends. The analysis defines 12 April 2024 as the event date and matches daily A-share returns from 1 August 2023 to 10 May 2024 with 2023 financial data. Cumulative abnormal returns (CARs) are calculated over [-1,+1], [-3,+3], and [-5,+5] windows. Firms with incomplete returns are excluded, and continuous variables are winsorized at the 1st and 99th percentiles, yielding 4,211 observations. Dividend yield is significantly and positively associated with CAR in all three windows. In the baseline regression, a one-percentage-point increase in dividend yield corresponds to an approximately 0.808-percentage-point increase in CAR[-3,+3]. These findings indicate that investors reacted more favorably to firms with higher pre-announcement dividend yields when the policy was released. This evidence clarifies the policy's immediate cross-sectional pricing implications.