This file is part of IDEAS, which uses RePEc data


[ Papers | Articles | Software | Books | Chapters | Authors | Institutions | JEL Classification | NEP reports | Search | New papers by email | Author registration | Rankings | Volunteers | FAQ | Blog | Help! ]

Do Changes in Dividends Signal the Future or the Past?

Author info | Abstract | Publisher info | Download info | Related research | Statistics
Author Info
 Benartzi, Shlomo
Michaely, Roni
Thaler, Richard H

Additional information is available for the following registered author(s):

Abstract

Many dividend theories imply that changes in dividends have information content about the future earnings of the firm. The authors investigate this implication and find only limited support for it. Firms that increase dividends in year 0 have experienced significant earnings increases in years -1 and 0, but show no subsequent unexpected earnings growth. Also, the size of the dividend increase does not predict future earnings. Firms that cut dividends in year 0 have experienced a reduction in earnings in year 0 and in year -1, but these firms go on to show significant increases in earnings in year 1. However, consistent with Lintner's model on dividend policy, firms that increase dividends are less likely than nonchanging firms to experience a drop in future earnings. Thus, their increase in concurrent earnings can be said to be somewhat 'permanent'. In spite of the lack of future earnings growth, firms that increase dividends have significant (though modest) positive excess returns for the following three years. Copyright 1997 by American Finance Association.

Download Info
To download:

If you experience problems downloading a file, check if you have the proper application to view it first. Information about this may be contained in the File-Format links below. In case of further problems read the IDEAS help file. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://links.jstor.org/sici?sici=0022-1082%28199707%2952%3A3%3C1007%3ADCIDST%3E2.0.CO%3B2-X&origin=repec
File Format: application/pdf
File Function: full text
Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Publisher Info
Article provided by American Finance Association in its journal Journal of Finance.

Volume (Year): 52 (1997)
Issue (Month): 3 (July)
Pages: 1007-34
Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Handle: RePEc:bla:jfinan:v:52:y:1997:i:3:p:1007-34

Contact details of provider:
Web page: http://www.afajof.org/
More information through EDIRC

Order Information:
Web: http://www.afajof.org/membership/join.asp

For technical questions regarding this item, or to correct its listing, contact: (Christopher F. Baum).

Related research
Keywords:

Other versions of this item:

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)
  1. Taeyoon Sung & Daehwan Kim & Ludwig Chincarini, 2006. "Corporate scandals and the market response of dividend payout changes," Applied Financial Economics, Taylor and Francis Journals, vol. 16(7), pages 535-549, April. [Downloadable!] (restricted)
  2. Joos, Peter & Plesko, George, 2004. "Costly Dividend Signaling: The Case of Loss Firms with Negative Cash Flows," Working papers Costly Dividend Signaling, Massachusetts Institute of Technology (MIT), Sloan School of Management. [Downloadable!]
  3. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2002. "Dividend Policy inside the Firm," NBER Working Papers 8698, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  4. T. McCluskey & B. M. Burton & D. M. Power & C. D. Sinclair, 2006. "Evidence on the Irish stock market's reaction to dividend announcements," Applied Financial Economics, Taylor and Francis Journals, vol. 16(8), pages 617-628, May. [Downloadable!] (restricted)
  5. Alon Brav & John R. Graham & Campbell R. Harvey & Roni Michaely, 2003. "Payout Policy in the 21st Century," NBER Working Papers 9657, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  6. Nam, Jouahn & Wang, Jun & Zhang, Ge, 2004. "The impact of the dividend tax cut and managerial stock holdings on corporate dividend policy," Working Papers 2004-09, University of New Orleans, Department of Economics and Finance. [Downloadable!]
  7. Ashoka Mody & Alexander Lehmann, 2004. "International Dividend Repatriations," IMF Working Papers 04/5, International Monetary Fund. [Downloadable!]
  8. Neves, Elisabete & Pindado, Julio & Torre, Chabela de la, 2006. "Dividends: New evidence on the catering theory," Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". Working Papers "New Trends on Business Administration". 2006-14, Interuniversitary Doctorate Program "New Trends on Business Administration", Universities of Valladolid, Burgos and Salamanca (Spain). Programa de Doctorado Interuniversitario "Nuevas Tendencias en Di. [Downloadable!]
  9. Renneboog, L.D.R. & Trojanowski, Grzegorz, 2005. "Patterns in payout policy and payout channel choice of UK firms in the 1990s," Discussion Paper 22, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  10. Malcolm Baker & Jeffrey Wurgler, 2003. "A Catering Theory of Dividends," NBER Working Papers 9542, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  11. Harry DeAngelo & Linda DeAngelo & Rene Stulz, 2004. "Dividend Policy, Agency Costs, and Earned Equity," NBER Working Papers 10599, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  12. DeAngelo, Harry & DeAngelo, Linda & Stulz, Rene M., 2004. "Dividend Policy, Agency Costs, and Earned Equity," Working Paper Series 2004-10, Ohio State University, Charles A. Dice Center for Research in Financial Economics. [Downloadable!]
  13. Ivo Welch, 2002. "Columbus' Egg: The Real Determinant of Capital Structure," NBER Working Papers 8782, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Jacob Boudoukh & Roni Michaely & Matthew Richardson & Michael Roberts, 2004. "On the Importance of Measuring Payout Yield: Implications for Empirical Asset Pricing," NBER Working Papers 10651, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  15. Carlos Martins, 2007. "Consistency of Dividend Signalling and Future Maturity Level:Evidence from UK Data," Working Papers de Economia (Economics Working Papers) 40, Departamento de Economia, Gestão e Engenharia Industrial, Universidade de Aveiro. [Downloadable!]
  16. Jan Bena & Jan Hanousek, 2008. "Rent Extraction by Large Shareholders: Evidence Using Dividend Policy in the Czech Republic," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 58(3-4), pages 106-130, May. [Downloadable!]
    Other versions:
Statistics
Access and download statistics

Did you know? All top Economics journals are listed on RePEc.

This page was last updated on 2008-11-26.

This information is provided to you by IDEAS at the Department of Economics, College of Liberal Arts and Sciences, University of Connecticut using RePEc data on a server sponsored by the Society for Economic Dynamics.