Stock-market populism in China: dividends, buybacks and surplus extraction

Abstract

This paper aims to examine how China’s A-share market responds to dividend and share-repurchase announcements, interpreting payout policies as mechanisms of financialisation and surplus distribution rather than purely informational signals about firm fundamentals. The study applies an event-study methodology using the market-model CAPM to estimate abnormal returns surrounding payout announcements. Normal returns are estimated over a 220-trading-day estimation window (t = −250 to −30), while market reactions are analysed across multiple event windows within [−15, +15] trading days around the announcement. The sample comprises 765 payout events (342 combined dividend-repurchase announcements and 423 stand-alone repurchase announcements) from Chinese A-share firms between 2018 and 2024, primarily drawn from CSI 300 constituents. Average abnormal returns (AAR) and cumulative average abnormal returns (CAAR) are evaluated across ownership types, listing boards, industries and regions. Both dividends and share repurchases generate statistically significant positive abnormal returns, but with distinct dynamics. Dividend announcements produce gradual and persistent valuation effects, with CAAR reaching approximately 7% in the (0, +15) window, indicating economically meaningful revaluation. Repurchase announcements generate sharper announcement-day reactions of roughly 2%–3%, but these effects dissipate more rapidly. Market responses are consistently stronger for non-state-owned enterprises than for state-owned enterprises and vary across regions and listing segments, reflecting uneven financial development and delayed information assimilation. By situating payout announcements within a heterodox political-economy perspective, the study reframes abnormal returns as the capitalisation of surplus transfers embedded in financialised governance structures.