Download or read book Dividend Changes and Signaling of Future Cash Flows written by Amy Chun-Chia Chang and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We present fresh evidence on the validity of the dividend signaling hypothesis (DSH), by using a new testing approach. We test the unambiguous prediction from the DSH that the association between current dividend changes and future profitability is stronger for firms with higher marginal net benefits from signaling. Using a simple dividend signaling model, we derive three empirically identifiable drivers of the marginal net benefit of signaling: cash flow predictability, market-to-book, and past equity returns. Our empirical tests support the DSH. There is a significant association between current dividend changes and future earnings performance for firms with low cash flow predictability, low market-to-book ratio, and low past equity returns. But, as predicted by the DSH, the association is much weaker for firms with high cash flow predictability, high book-to-market, and high past equity returns. There is also evidence that the marginal signaling benefits at the firm-level are influenced by aggregate factors: the information content of dividend changes is time-varying, increasing (decreasing) in booms (recessions) and in periods of high (low) aggregate stock market performance.

Download or read book Do Firms Use Dividends to Signal Large Future Cash Flows written by Yaron Brook and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We find that firms poised to experience large, permanent cash flow increases after four years of flat cash flow tend to boost their dividends before their cash flow jumps. These firms also have a high frequency of relatively large dividend increases prior to the cash flow shock. Investors appear to interpret the dividend changes as signals about future profitability: firms that sharply increase their dividends earn large market-adjusted stock returns in the year before their cash flow rises. This direct link between positive cash flow shocks, dividend decisions, and stock returns supports the hypothesis that dividend changes signal positive information about permanent future cash flow levels. However, our results also suggest that signaling plays a relatively minor role in corporate dividend policy.

Download or read book Costly Dividend Signaling written by Peter Joos and published by Forgotten Books. This book was released on 2015-06-25 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from Costly Dividend Signaling: The Case of Lost Firms With Negative Cash Flows We examine the dividend-signaling hypothesis in a sample of firms for which dividend increases are particularly costly, namely loss firms with negative cash flows. When compared to loss firms with positive cash flows, we find the predictive power of dividend increases for future return on assets to be greater for loss firms with negative cash flows, consistent with the predictive power of the dividend signal being stronger when its cost is higher. Our results provide support for the dividend-signaling hypothesis and have broader implications since loss firms comprise a large and increasing share of publiclytraded firms. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

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 The Information Content of Dividends written by Roni Michaely and published by . This book was released on 2018 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contrary to the central predictions of signaling models, changes in profits do not empirically follow changes in dividends, and firms with the least need to signal pay the bulk of dividends. We show both theoretically and empirically that dividends signal safer, rather than higher, future profits. Using the Campbell (1991) decomposition, we are able to estimate expected cash flows from data on stock returns. Consistent with our model's predictions, cash-flow volatility changes in the opposite direction from that of dividend changes, and larger changes in volatility come with larger announcement returns. We find similar results for share repurchases. Crucially, the data support the prediction--unique to our model--that the cost of the signal is foregone investment opportunities. We conclude that payout policy conveys information about future cash-flow volatility.

Download or read book Costly Dividend Signaling written by Peter Richard Joos and published by . This book was released on 2004 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the dividend-signaling hypothesis in a sample of firms for which dividend increases are particularly costly, namely loss firms with negative cash flows. When compared to loss firms with positive cash flows, we find the predictive power of dividend increases for future return on assets to be greater for loss firms with negative cash flows, consistent with the predictive power of the dividend signal being stronger when its cost is higher. Our results provide support for the dividend-signaling hypothesis and have broader implications since loss firms comprise a large and increasing share of publicly-traded firms. Keywords: dividends, dividend signalling, losses. JEL Classifications: G35, G32, M41.

Download or read book Costly Dividend Signaling The Case of Lost Firms with Negative Cash Flows Classic Reprint written by Peter Joos and published by Forgotten Books. This book was released on 2018-02-24 with total page 58 pages. Available in PDF, EPUB and Kindle. Book excerpt: Excerpt from Costly Dividend Signaling: The Case of Lost Firms With Negative Cash Flows We examine the dividend-signaling hypothesis in a sample of firms for which dividend increases are particularly costly, namely loss firms With negative cash flows. When compared to loss firms with positive cash flows, we find the predictive power of dividend increases for future return on assets to be greater for loss firms with negative cash flows, consistent with the predictive power of the dividend signal being stronger when its cost is higher. Our results provide support for the dividend-signaling hypothesis and have broader implications since loss firms comprise a large and increasing share of publicly traded firms. About the Publisher Forgotten Books publishes hundreds of thousands of rare and classic books. Find more at www.forgottenbooks.com This book is a reproduction of an important historical work. Forgotten Books uses state-of-the-art technology to digitally reconstruct the work, preserving the original format whilst repairing imperfections present in the aged copy. In rare cases, an imperfection in the original, such as a blemish or missing page, may be replicated in our edition. We do, however, repair the vast majority of imperfections successfully; any imperfections that remain are intentionally left to preserve the state of such historical works.

Download or read book REIT Splits and Dividend Changes written by Qiang Li and published by . This book was released on 2006 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent work on stock splits have attempted to relate the information value associated with splits with that from dividends signaling. This paper extends this genre of research by evaluating the issue of dividend predictability using REIT data where the self-selection issue associated with dividend payment is minimized. The use of REIT data also eliminates the quot;differential expectationsquot; effect for non-dividend paying firms, thus rendering a more robust test of the information substitutability hypothesis postulated by Nayak and Prabhala (2001). To the extent that stock splits are signals of future cash flows, we further examine the question of leverage predictability associated with REIT splits, particularly for highly levered firms. We find that REITs that use dividend changes as a signaling mechanism prior to splits have smaller price responses to the private information revealed by splits than those that do not provide such signals, consistent with the notion that dividends and splits are indeed information substitutes. Further, REIT splits provide useful information about future dividend and leverage changes.

Download or read book Dividend Policy Revisited written by Michael Bradley and published by . This book was released on 1996 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Dividends and Dividend Policy written by H. Kent Baker and published by John Wiley & Sons. This book was released on 2009-05-04 with total page 552 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dividends And Dividend Policy As part of the Robert W. Kolb Series in Finance, Dividends and Dividend Policy aims to be the essential guide to dividends and their impact on shareholder value. Issues concerning dividends and dividend policy have always posed challenges to both academics and professionals. While all the pieces to the dividend puzzle may not be in place yet, the information found here can help you gain a firm understanding of this dynamic discipline. Comprising twenty-eight chapters—contributed by both top academics and financial experts in the field—this well-rounded resource discusses everything from corporate dividend decisions to the role behavioral finance plays in dividend policy. Along the way, you'll gain valuable insights into the history, trends, and determinants of dividends and dividend policy, and discover the different approaches firms are taking when it comes to dividends. Whether you're a seasoned financial professional or just beginning your journey in the world of finance, having a firm understanding of the issues surrounding dividends and dividend policy is now more important than ever. With this book as your guide, you'll be prepared to make the most informed dividend-related decisions possible—even in the most challenging economic conditions. The Robert W. Kolb Series in Finance is an unparalleled source of information dedicated to the most important issues in modern finance. Each book focuses on a specific topic in the field of finance and contains contributed chapters from both respected academics and experienced financial professionals.

Download or read book Corporate Payout Policy written by Harry DeAngelo and published by Now Publishers Inc. This book was released on 2009 with total page 215 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Payout Policy synthesizes the academic research on payout policy and explains "how much, when, and how". That is (i) the overall value of payouts over the life of the enterprise, (ii) the time profile of a firm's payouts across periods, and (iii) the form of those payouts. The authors conclude that today's theory does a good job of explaining the general features of corporate payout policies, but some important gaps remain. So while our emphasis is to clarify "what we know" about payout policy, the authors also identify a number of interesting unresolved questions for future research. Corporate Payout Policy discusses potential influences on corporate payout policy including managerial use of payouts to signal future earnings to outside investors, individuals' behavioral biases that lead to sentiment-based demands for distributions, the desire of large block stockholders to maintain corporate control, and personal tax incentives to defer payouts. The authors highlight four important "carry-away" points: the literature's focus on whether repurchases will (or should) drive out dividends is misplaced because it implicitly assumes that a single payout vehicle is optimal; extant empirical evidence is strongly incompatible with the notion that the primary purpose of dividends is to signal managers' views of future earnings to outside investors; over-confidence on the part of managers is potentially a first-order determinant of payout policy because it induces them to over-retain resources to invest in dubious projects and so behavioral biases may, in fact, turn out to be more important than agency costs in explaining why investors pressure firms to accelerate payouts; the influence of controlling stockholders on payout policy --- particularly in non-U.S. firms, where controlling stockholders are common --- is a promising area for future research. Corporate Payout Policy is required reading for both researchers and practitioners interested in understanding this central topic in corporate finance and governance.

Download or read book Do Firms Use Dividends to Signal Future Cash Flow Increases written by and published by . This book was released on 1999 with total page 110 pages. Available in PDF, EPUB and Kindle. Book excerpt:

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 Are Dividend Changes a Signal of Future Profitability written by John F. O'Driscoll and published by . This book was released on 2002 with total page 78 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Signalling Safety written by Roni Michaely and published by . This book was released on 2019 with total page 99 pages. Available in PDF, EPUB and Kindle. Book excerpt: Contrary to signaling models' central predictions, changes in the level of cash flows do not empirically follow changes in dividends. We use the Campbell (1991) decomposition to construct cash-flow and discount-rate news from returns and find the following: (1) Both dividend changes and repurchase announcements signal changes in cash-flow volatility (in opposite direction); (2) larger cash-flow volatility changes come with larger announcement returns; and (3) neither discount-rate news, nor the level of cash-flow news, nor total stock return volatility change following dividend changes. We conclude cash-flow news -- and not discount-rate news -- drive payout policy, and payout policy conveys information about future cash-flow volatility.

Download or read book Signalling with Dividends The Signalling Effects of Dividend Change Announcements written by Elisabete Simões Vieira and published by . This book was released on 2007 with total page 73 pages. Available in PDF, EPUB and Kindle. Book excerpt: The dividend policy is one of the most debated topics in the finance literature. One of the different lines of research on this issue is based on the information content of dividends, which has motivated a significant amount of theoretical and empirical research. According to the dividend signalling hypothesis, dividend change announcements trigger share returns because they convey information about management's assessment on firms' future prospects. We start by analysing the classical assumptions of dividend signalling hypothesis. The evidence gives no support for a positive relation between dividend change announcements and the market reaction for French firms, and only a weak support for the Portuguese and the UK firms. After accounting for non-linearity in the mean reversion process, the global results do not give support to the assumption that dividend change announcements are positively related with future earnings changes.Afterwards, we formulate two hypotheses in order to explore the window dressing phenomenon and the maturity hypothesis, finding some evidence, especially in the UK market, for both of the phenomenon.

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.