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 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 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 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 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 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 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 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 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 Signaling Free Cash Flow and Nonmonotonic Dividends written by Kathleen P. Fuller and published by . This book was released on 2002 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt: It has long been argued that dividends are used as a signal of future earnings or as a means of distributing excess cash. However, the empirical tests of these two hypotheses have generated inconclusive results. One reason for these inconclusive results is that no model combines both the signaling and cash-flow-distribution aspects of dividends. This paper develops a framework in which firms have an incentive to pay dividends to both signal and distribute free cash flows. High-quality observationally-distinct firms pay dividends to eliminate the free-cash-flow problem, while high-quality observationally-similar firms that the market perceives as intermediate quality pay dividends to both signal future earnings and reduce the free-cash-flow problem. The equilibrium entails a nonmonotonicity in dividend payments with respect to the signal observed by the market at the interim date; the highest quality firms pay lower dividends than those of intermediate quality. Our theoretical argument helps reconcile the existing inconclusive empirical findings and also generates new empirical predictions that are then tested. The evidence supports these predictions.

Download or read book Dividend Policy and Corporate Governance written by Luis Correia da Silva and published by OUP Oxford. This book was released on 2004-02-26 with total page 204 pages. Available in PDF, EPUB and Kindle. Book excerpt: Dividends are not only a signal about a firm's prospects under asymmetric information, but they can also act as a corporate governance device to align the management's interests with those of the shareholders. Dividend Policy and Corporate Governance is the first comprehensive volume on the relationship between dividend policy and corporate governance, and examines in detail empirical studies and current theories. Reviewing the interactions between dividend policy and other corporate governance mechanisms, it compares results for the UK and the US with those for other countries such as France, Germany, and Japan, and provides new empirical evidence on corporate governance in continental Europe and its impact on dividends. Focusing on one of the main representatives of this system, Germany, it highlights major differences between the dividend policies of German firms and those of UK or US firms. Conventional wisdom states that German dividends are lower than UK or US dividends, yet on a published-profits basis the exact converse is true. In addition, the authors demonstrate a link between corporate control structures and dividend payouts, report evidence that the existence of a loss is an additional determinant of dividend changes, and demonstrate that the tax status of the controlling shareholder and the firm's dividend payout are not linked. The conclusions reached in this book have important implications for the current debate on corporate governance, making it invaluable for academics, finance professionals, regulators, and legal advisors.

Download or read book Dividend Policy and Behavior in Emerging Markets written by Jack D. Glen and published by World Bank Publications. This book was released on 1995 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Payout Composition and Investors Reaction to Dividend and Stock Repurchase Announcements written by David Gelb and published by . This book was released on 2000 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study investigates the relative magnitude of the market reactions to dividend and stock repurchase announcements. Prior studies motivate conflicting predictions as to how investors perceive dividend distributions versus stock repurchase announcements as signals about future cash flows. Lucas and McDonald (1998) predict that firms with more favorable private information will pay less dividends and repurchase more shares. Other studies (Brickley [1983], Jagannathan et al. [1999]) argue that an increase in the regular dividend, because it entails an implicit commitment to maintain the higher payout level in future periods, represents a more positive signal about future cash flows. These studies predict that firms anticipating a more quot;permanentquot; increase in cash flows are more likely to distribute dividends than stock repurchases.I test these competing hypotheses by investigating how the market reaction to an announced distribution is affected by the composition of the firm's total (year-to-date) announced cash payout during the fiscal year. Lucas and McDonald (1998) argue that firms employ a combination of dividends and stock repurchases to minimize their total signaling costs and the market reaction to an announced cash distribution depends on the composition of the total payout (the proportion of the announced stock repurchase program to the sum of the announced value of the stock repurchase program and the dividend increase). I find that after controlling for the magnitude of the distribution and the information environment, the market reaction is more favorable when regular (but not one-time) dividends comprise a larger proportion of the total payout. My findings suggest that regular dividends are a more positive signal about future cash flows and elicit a more favorable market reaction than stock repurchases.Key Words: Corporate signaling; Dividends; Stock repurchases.

Download or read book Cash Flows as Determinants of Dividends Policy in Mature Firms written by Yousuf Khan and published by . This book was released on 2009 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: Earnings have long been used as a measure to determine dividends policy in firms. While many studies have demonstrated an association between earnings and dividend changes, not many studies have proved so with cash flows. It is argued in this study that while earnings are in important factor in dividend setting process, the liquidity of a firm is more important in changes to dividends as firms don't like to change dividends unless the nature of the change in earnings and cash flows is also permanent. The major objective of this paper is to examine the association between operating cash flows and dividend changes given earnings. Some 25 firms' were selected from FTSE 350 and 25 from FTSE AIM of the London Stock Exchange for the panel data analysis and tested using OLS multivariate regression methodology.The results indicate no significant association between cash flows and dividend changes; however, they do confirm earlier findings that dividend changes are strongly associated with earnings. The thinking behind the regression model is that while there are notable dividend paying firms in the FTSE 350, there is a lack of dividend evidence in AIM firms, hence the models developed test for dividend changes given cash flows in FTSE 350 firms (mature firms) and capital gains in FTSE AIM firms (growth firms) using dividend change as the dependent variable in the mature firms and share price movement for growth firms.Originally in the proposal to this dissertation four sub-hypotheses were proposed, however, the first two hypotheses were amalgamated in to one sub-hypothesis. Also, some of the variables originally declared were deleted or mostly replaced by more appropriate variables.

Download or read book Dividend Policy written by Ronald C. Lease and published by Harvard Business Review Press. This book was released on 2000 with total page 248 pages. Available in PDF, EPUB and Kindle. Book excerpt: With relevant anecdotes, surveys, examples, and research from the financial press, company documents, and academic literature, the book focuses less on mathematics and more on the intuition of share valuation as a function of dividend policy.

Download or read book REVERSAL OF FORTUNE DIVIDEND POLICY AND THE DISAPPEARANCE OF SUSTAINED EARNINGS GROWTH written by HARRY DEANGELO, LINDA DEANGELO AND DOUGLAS SKINNER and published by . This book was released on 1994 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Handbook of Maritime Economics and Business written by Costas Grammenos and published by Taylor & Francis. This book was released on 2013-07-04 with total page 1093 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is the founding title in the Grammenos Library. The diversity of the subjects covered is unique and the results of research developed over many years are not only comprehensive, but also have important implications on real life issues in maritime business. The new edition covers a vast number of topics, including: • Shipping Economics and Maritime Nexus • International Seaborne Trade • Economics of Shipping Market and Shipping Cycles • Economics of Shipping Sectors • Issues in Liner Shipping • Economics of Maritime Safety and Seafaring Labour Market • National and International Shipping Policies • Aspects of Shipping Management and Operations• Shipping Investment and Finance • Port Economics and Management • Aspects of International Logistics