(Bloomberg) -- Chinese companies are increasingly bumping up their dividend payouts, a sign that a regulatory push for higher shareholder returns is bearing fruit.  

Jilin Expressway Co. walked back on its decision — from just a week earlier — to skip dividends for 2023 after an inquiry from the Shanghai Stock Exchange. Fangda Special Steel Technology Co. also similarly reversed its decision after the bourse questioned it. 

Their quick pivots underscore how authorities are driving through a once-a-decade reform plan to revitalize a stock market languishing about 40% below its 2021 peak. Steering companies away from unnecessarily hoarding cash may prove to be a palpable selling point to investors, even as China contends with more intractable issues like the struggling economy and a property crisis.  

The Nine-Point Guideline, published by the State Council April 12, aims to promote value investing and close corporate governance loopholes that have hampered investor confidence. Regulators are also speeding up the implementation of the other recommendations.

Read: Onshore China Stocks Can Gain 20% on Beijing’s Policy: Goldman

Dawning Information Industry Co. announced on April 19 that Chinese securities regulators are investigating the chairman of the tech firm over $21 million of trades made by his wife. 

“These are examples of how it’s about rolling out a combo of moves, on top of the policy framework,” said Li Minghong, a fund manager at Beijing Yikun Asset Management LP. “The approach is to expose the companies whose actions are not up to par.”

Failing to comply with the dividends rules may be one of the easiest ways to get on the wrong side of regulators. The guideline requires firms to disclose payout plans before going public, specifies measures to boost dividends, and intends to reward companies that increase profit distribution.

Chinese companies have been mindful of dividends as an issue of focus for regulators in recent months. Nearly half of the 203 members on the benchmark CSI 300 Index that have released their 2023 earnings increased their dividend payout ratio by more than one percentage point from the previous year, data compiled by Bloomberg show. 

For Jilin, the Shanghai exchange’s inquiry focused on why the company isn’t paying sufficient dividends despite being profitable in the past five years. In an April 18 filing, Jilin said it’ll hand out 170 million yuan ($23.5 million) to “protect investor interests and foster a positive corporate image of state-owned companies.”

Still, the payouts have done little for Jilin and Fangda. Jilin’s shares have fallen about 4.9% since the announcement. Fangda’s stock is down about 3.3% since it disclosed on April 8 that it’ll hand out 233 million yuan.

“While the policy changes will have a direct impact on the actions of listed companies, their impact on investor sentiment may be a lot more gradual, especially when the crux for the market is still a lack of fundamental drivers for economic growth,” Li said. 

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