The market reaction of bonus shares issuing and the lottery-like stock preference: Evidence from Chinese stock market
The market reaction of bonus shares issuing and the lottery-like stock preference: Evidence from Chinese stock market
This paper documents the unique “large amount of stock dividends” phenomenon in the Chinese stock market and uses lottery-like stock preference to explain the inverted V shaped pattern of abnormal returns. Chinese listed firms often issue large percent of bonus shares, or transfer lots of capital reserve into common stocks. We find that after such operations, stocks tend to be overpriced in the short term and earn lower subsequent returns in the long run. Using two different measures of the lott