Download or read book Analysts Dividend Forecasts and Dividend Signaling written by Upinder Dhillon and published by . This book was released on 2003 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study complements existing research on the information content of dividends by focusing on the use of dividend expectations. We derive a measure of unexpected dividend changes, called dividend surprises, based on Value Line forecasts. Our results highlight a potentially serious sample misclassification arising from the extensively used naive dividend change method. Classifications of unexpected changes in dividends using dividend surprises result in stock price reactions and earnings changes that are consistent with the implications of dividend signaling models. Also, the approach followed in this paper permits the analysis of a significantly quot;forgottenquot; sample in previous event studies: Firms announcing no dividend changes in which investors (analysts) are expecting a change. We find that no change in dividends often reflects a negative dividend surprise and is indeed associated with negative stock price reaction and negative earnings changes. We provide evidence that the failure to find a relationship between dividend changes and future earning changes may be due to measurement error arising from misclassification of dividend changes. One implication of this study for future research is that empirical tests of dividend signaling models should incorporate dividend forecasts.

Download or read book The Accuracy of Analysts Dividend Forecasts Around the World written by Philip R. Brown and published by . This book was released on 2009 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the link between the accuracy of consensus analysts' dividend forecasts, earnings predictability and dividend policies of firms in 39 countries from 1995 to 2004. For firms that display stronger dividend smoothing, as modeled by Lintner (1956), there is a lower correlation between dividend and earnings forecast errors, with less of the earnings uncertainty being passed into dividend uncertainty. The link between earnings and dividend forecast errors is weaker in common-law, capital market-based countries and in countries with well-developed financial (debt and equity) markets, where firm managers have greater incentives to smooth dividends and to use dividends for signaling.

Download or read book Analysts Dividend Forecasts written by Philip Brown and published by . This book was released on 2002 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Analyst Dividend Forecasts and Their Usefulness to Investors written by Pawel Bilinski and published by . This book was released on 2016 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: In contrast to the disappearing dividends view, we predict that variability in dividend payments increases investor demand for dividend information and analysts respond to this demand by producing informative dividend forecasts. We examine dividend payers from 16 countries spanning 2000-2013 and find that only 25% of firms exhibit sticky dividends, while the majority either increase (54%) or decrease (21%) dividends. Dividend forecasts are available for 87.9% of all dividend-issuing firms and their availability increases with dividend variability. Dividend estimates are useful to investors because they (i) are more accurate and better aligned with market dividend expectations than other surrogates, (ii) convey incremental information beyond that contained in other fundamentals, and (iii) help investors interpret the persistence of earnings news.

Download or read book Dividend Initiations Analyst Forecasts and the Cost of Capital written by Jesus M. Salas and published by . This book was released on 2006 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, I explore the information content of dividends by looking at dividend initiation announcements. While earlier literature has used analyst forecasts to explore the information content of dividends, they have all focused on dividend changes. I show that analysts revise their one-year-ahead (long-run growth) forecasts upwards (downward) one month after the initiation announcement. However, after the fiscal year end in which a firm announced the dividend initiation, both one-year-ahead earnings and long-run earnings growth forecasts are significantly lower than before the firm became a dividend payer. These results suggest dividends are not a signal of good future prospects. Rather, the results indicate that dividend initiations signal that a firm has fewer long-run growth opportunities. They also suggest dividends are a way of reducing the agency problem. I show that the cost of capital decreases significantly one year after the initiation announcement. Thus, it seems that paying dividends helps reduce the agency problem following a decrease in growth opportunities. Finally, my results also suggest that firms do not start paying dividends in order to reduce their cost of capital.

Download or read book The Existence of the Dividend Signaling Equilibria written by Francisca Beer and published by . This book was released on 1990 with total page 264 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Accuracy of Management Dividend Forecasts in Australia written by Philip Brown and published by . This book was released on 2000 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Confirming Dividend Changes and the Non Monotonic Investor Revision of Earnings Persistence written by Christian Müller and published by Springer Science & Business Media. This book was released on 2013-12-30 with total page 157 pages. Available in PDF, EPUB and Kindle. Book excerpt: The stylized facts that firms pay and investors react to dividends disregard dividend neutrality. Taking on the perspective that informational asymmetries are the central determinant for dividend value relevance, Christian Müller assumes that firm’s dividend decision conveys useful information to investors. He shows that investors use dividend changes to revise their a priori expectations about the persistence of a current earnings change. While his theoretical and empirical analyses generally imply that dividend changes constitute informative, but imperfect information signals, he further identifies situations in which they are substantial to investors. Christian Müller’s research comprehensively examines the informational role of dividend policy and provides new insights to the corresponding Bayesian investor learning process.

Download or read book Making the Dividend Discount Model Relevant for Financial Analysts written by Robert Ferguson and published by . This book was released on 2018 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: The traditional dividend discount model is irrelevant for financial analysts. It requires them to forecast an infinite stream of dividends. Most of the present value is due to the forecast dividends far in the future. This part of the forecast is highly uncertain; hence nobody takes the forecast seriously or believes the resulting present value. Fairfield [1994] restates the model in terms of abnormal earnings, which reflect a firm's abnormal ROE. A reasonable abnormal ROE forecast will fall to zero before long. This and the discounting process assure that the early years account for most of the present value. Thus, the forecast required by this variant of the model is believable.This paper reviews Fairfield's model and provides additional insight into the price/book value and price/earnings ratios. It also presents her model as a spreadsheet that financial analysts can use. Hypothetical growth and val-ue companies are analyzed to illustrate the ideas. A hypothetical cyclical company is analyzed to show that Fairfield's characterization of the price/earnings ratio's behavior is too simple. An innovative and practical approach to forecasting abnormal ROEs is developed. The model also is used to illustrate the advantage of financing growth by selling stock at a high price/book value ratio.

Download or read book Signaling Investment Opportunities and Dividend Announcements written by Pyung Sig Yoon and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines potential explanations for the wealth effects surrounding dividend change announcements. We find that new information concerning managers' investment policies is not revealed at the time of the dividendannouncement. We also find that dividend increases (decreases) are associated with subsequent significant increases (decreases) in capital expenditures over the three years following the dividend change and that dividend change announcements are associated with revisions in analysts' forecasts of current earnings. These results are consistent with the cash-flow-signaling hypothesis rather than the free-cash-flow hypothesis as an explanation for the observed stock price reactions to dividend change announcements.

Download or read book Theory of Signalling Dividends written by Shebani Bhargava and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The dividend policy is one of the most debated topics in finance literature. Dividend announcements can contain information about the company's future performance and hence, since decades many researches have argued that the dividend policy decisions of firms are very important mainly due to the signalling effect they have on the firms future performance. According to the dividend signalling hypothesis, dividend change announcements trigger share returns because they convey information about management's assessment on firms' future prospects. This paper begins by explaining certain concepts which are useful in understanding the theory at hand. It then moves on to studying the Theory of Signalling Dividends. Two hypotheses are formed and in order to explore them, an empirical case study is undertaken whereby the dividend announcements, divided rates, share prices, and profits of two companies listed on the Indian stock market are compared and analysed. This paper therefore attempts to analyse the theory of signalling dividends and to contribute positively to the understanding of the behaviour of Indian share prices in relation to dividend announcements.

Download or read book Revisiting the Contemporaneous Signaling Effects of Earnings and Dividend Announcements written by Louis T. W. Cheng and published by . This book was released on 2004 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Existing literature suggests that earnings and its forecasts provide stronger signal than dividends about firms' future performance. We test the signaling effects of earnings and dividends under a market setting which has 1) low informativeness of earnings due to concentrated family-shareholding ownership structure; 2) low corporate transparency; and 3) no tax on dividends. Our results show significant share price reactions during earnings and dividend announcements. While the non-taxable feature of dividends does not substantially weaken its signaling effect, the low information content of earnings and low corporate transparency of firms reduce the signaling power of earnings. We find that dividend, from the perspective of the firms, is a more effective and cost-efficient channel to signal future performance.

Download or read book Dividend Changes Do Not Signal Changes in Future Profitability written by Gustavo Grullon and published by . This book was released on 2003 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt: One of the most important predictions of the dividend-signaling hypothesis is that dividend changes are positively correlated with future changes in profitability and earnings. Contrary to this prediction, we show that after controlling for the well-known non-linear patterns in the behavior of earnings, dividend changes contain no information about future earnings changes. We also show that dividend changes are negatively correlated with future changes in profitability (return on assets). Finally, we investigate the out-of-sample forecasting ability of dividend changes. We find that models that include dividend changes do not outperform those that do not include dividend changes. In fact, our evidence indicates that investors are better off not using dividend changes in their earnings forecasting models.

Download or read book Analysts Dividend Forecasts Portfolio Selection and Market Risk Premia written by Franziska Becker and published by . This book was released on 2008 with total page 32 pages. Available in PDF, EPUB and Kindle. Book excerpt: The most relevant practical impediment to an application of the Markowitz portfolio selection approach is the problem of estimating return moments, in particular return expectations. We analyze the consequences of using return estimates implied by analysts' dividend forecasts under the explicit notion of taxes and non-flat term structures of interest rates and achieve quite good performance results. As a by-product, these results cast some doubt upon the adequacy of estimating market risk premia with implied returns, because estimation techniques with good performance results are hardly suited to describe market expectations.

Download or read book Payout Policy written by and published by . This book was released on 2007 with total page 83 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dividend policy continues to be among the premier unsolved puzzles in finance. A number of theories have been advanced to explain dividend policy. This e-book briefly reviews the principal theories of payout policy and dividend policy and summarizes the empirical evidence on these theories. Empirical evidence is equivocal and the search for new explanation for dividends continues.

Download or read book Market Reactions to Changes in Dividends and Analysts Forecasts written by Bong-Dae Choi and published by . This book was released on 1990 with total page 238 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Confirming Dividend Changes and the Non Monotonic Investor Revision of Earnings Persistence written by Christian Mueller and published by Springer Gabler. This book was released on 2014-01-02 with total page 137 pages. Available in PDF, EPUB and Kindle. Book excerpt: The stylized facts that firms pay and investors react to dividends disregard dividend neutrality. Taking on the perspective that informational asymmetries are the central determinant for dividend value relevance, Christian Müller assumes that firm’s dividend decision conveys useful information to investors. He shows that investors use dividend changes to revise their a priori expectations about the persistence of a current earnings change. While his theoretical and empirical analyses generally imply that dividend changes constitute informative, but imperfect information signals, he further identifies situations in which they are substantial to investors. Christian Müller’s research comprehensively examines the informational role of dividend policy and provides new insights to the corresponding Bayesian investor learning process.