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Dividends and Subsequent Profitability: An Examination of a Dual Dividend Stock Market

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  • Chin-Sheng Huang

    (Department of Finance, National Yunlin University of Science and Technology, Douliou 64002, Taiwan)

  • Chun-Fan You

    (Department of Finance, TransWorld University, Douliou 64063, Taiwan)

  • Hsiao-Fen Hsiao

    (Department of Accounting, Ningbo University, Ningbo 315211, P. R. China)

Abstract

This study examines the association between dual dividend changes and future profitability. A fundamental characteristic of dual dividend payouts is that both components, cash dividends and stock dividends, emit separate dividend signals for subsequent profitability. To analyze dividend signal theories, this study partitions the sample into three sub-samples according to the ratio of cash to stock dividends. Empirical evidence strongly indicates that dual dividend changes are positively associated with future profitability in the balanced dividend subsample. The results of this study are generally robust in terms of accommodating the factors of stock repurchases, investment growth opportunities, and business cycles.

Suggested Citation

  • Chin-Sheng Huang & Chun-Fan You & Hsiao-Fen Hsiao, 2017. "Dividends and Subsequent Profitability: An Examination of a Dual Dividend Stock Market," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 20(01), pages 1-35, March.
    • Handle: RePEc:wsi:rpbfmp:v:20:y:2017:i:01:n:s0219091517500023
    DOI: 10.1142/S0219091517500023
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    3. Mathew Abraham & James Lau & Alastair Marsden, 2019. "Underwriting of Australian Dividend Reinvestment Plans," Review of Pacific Basin Financial Markets and Policies (RPBFMP), World Scientific Publishing Co. Pte. Ltd., vol. 22(03), pages 1-26, September.

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