IDEAS home Printed from https://ideas.repec.org/a/taf/reroxx/v36y2023i1p2298-2319.html
   My bibliography  Save this article

Cash dividends, return on equity and earnings persistence

Author

Listed:
  • Wenzhou Li
  • Zhang Jingqi
  • Liang Chen

Abstract

With reference to Ohlson’ model, we optimise earnings persistence model and express earnings persistence measure as a function of return on equity (R.O.E.), dividends payout ratio and other factors. Our theoretical model reveals that dividends payout ratio has little effect on the earnings persistence, while R.O.E. has a decisive effect on earnings persistence. Using quarterly earnings data of 872 listed firms in China over 2011–2020, we calculate the Revised Persistence value of earnings (RPer value) of our earnings persistence model, and find that the Rper value of our model have more explanatory power than that of Kormendi and Lipe’ model. Our study also suggest that quarterly earnings are useful and have information content. Both the theoretical model and empirical results of our research are of great significance to understand and support the implementation of semi-compulsory cash dividends rules in China.

Suggested Citation

  • Wenzhou Li & Zhang Jingqi & Liang Chen, 2023. "Cash dividends, return on equity and earnings persistence," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(1), pages 2298-2319, March.
    • Handle: RePEc:taf:reroxx:v:36:y:2023:i:1:p:2298-2319
    DOI: 10.1080/1331677X.2022.2097106
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/1331677X.2022.2097106
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/1331677X.2022.2097106?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:reroxx:v:36:y:2023:i:1:p:2298-2319. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/rero .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.