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Dividends and earnings quality: Evidence from China

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  • Deng, Lu
  • Li, Sifei
  • Liao, Mingqing

Abstract

This paper investigates the association between dividend payouts and earnings quality for Chinese listed firms. The results show that dividend payouts are associated with more persistent earnings, higher accrual quality, and greater earnings informativeness, confirming the hypothesis on information content of dividends for Chinese firms. Further analyses show that the relationship between dividends and earnings could change with factors influencing the incentives to pay dividends. We find that the positive impact of dividend payouts on earnings quality is reduced for firms conducting equity refinancing. We also find evidence that the state ownership can reduce the information-conveying role of dividends.

Suggested Citation

  • Deng, Lu & Li, Sifei & Liao, Mingqing, 2017. "Dividends and earnings quality: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 255-268.
    • Handle: RePEc:eee:reveco:v:48:y:2017:i:c:p:255-268
    DOI: 10.1016/j.iref.2016.12.011
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    3. Bennetts, Shannon K & Love, Jasmine & Bennett, Clair & Burgemeister, Fiona & Westrupp, Elizabeth M & Hackworth, Naomi J & Mensah, Fiona K & Levickis, Penny & Nicholson, Jan M, 2023. "Do neighbourhoods influence how parents and children interact? Direct observations of parent–child interactions within a large Australian study," Children and Youth Services Review, Elsevier, vol. 146(C).
    4. Chua, Kia-Chong & Henderson, Claire & Grey, Barbara & Holland, Michael & Sevdalis, Nick, 2023. "Evaluating quality improvement at scale: A pilot study on routine reporting for executive board governance in a UK National Health Service organisation," Evaluation and Program Planning, Elsevier, vol. 97(C).
    5. Ni‐Yun Chen & Chi‐Chun Liu, 2021. "Share repurchases and market signaling: Evidence from earnings management," International Review of Finance, International Review of Finance Ltd., vol. 21(4), pages 1203-1224, December.
    6. Nie, Jing & Yin, Libo, 2022. "Do dividends signal safety? Evidence from China," International Review of Financial Analysis, Elsevier, vol. 82(C).
    7. Chintrakarn, Pandej & Chatjuthamard, Pattanaporn & Tong, Shenghui & Jiraporn, Pornsit, 2018. "How do powerful CEOs view dividends and stock repurchases? Evidence from the CEO pay slice (CPS)," International Review of Economics & Finance, Elsevier, vol. 58(C), pages 49-64.
    8. Wu, Ming & Ohk, Kiyool & Ko, Kwangsoo, 2019. "Are cash-flow betas really bad? Evidence from the Greater Chinese stock markets," International Review of Financial Analysis, Elsevier, vol. 63(C), pages 58-68.
    9. Niu, Yuhao & Wang, Sai & Wen, Wen & Li, Sifei, 2023. "Does digital transformation speed up dynamic capital structure adjustment? Evidence from China," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    10. Thanh, Su Dinh & Canh, Nguyen Phuc & Ha, Nguyen Tran Thai, 2020. "Debt structure and earnings management: A non-linear analysis from an emerging economy," Finance Research Letters, Elsevier, vol. 35(C).

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    More about this item

    Keywords

    G32; G35; Dividends; Earnings quality; Equity refinancing; State ownership; China;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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