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Dividend Policy and Earnings Quality: the French Evidence

Author

Listed:
  • Ghassen Allani

    (UPHF - Université Polytechnique Hauts-de-France, LARSH - Laboratoire de Recherche Sociétés & Humanités - UPHF - Université Polytechnique Hauts-de-France - INSA Hauts-De-France - INSA Institut National des Sciences Appliquées Hauts-de-France - INSA - Institut National des Sciences Appliquées)

  • Yves Mard

    (CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA [2017-2020] - Université Clermont Auvergne [2017-2020])

Abstract

This study examines the impact of dividend policy on earnings quality in the French context. Using 10 measures of earnings quality, we find a positive relation between dividend-paying policy and earnings quality, for measures of earnings quality based on accruals earnings, earnings time-series and investor responsiveness to earnings. We also observe that dividend payers smooth earnings more aggressively than dividend non-payers do. Additional analyses show that dividend payers use accruals to smooth earnings and strengthen earnings persistence. Our results reconcile the findings of previous studies, and question the particular status of smoothing among earnings management behaviors. They suggest that smoothing may be a desirable practice of earnings management (Graham et al 2005), supporting dividend policy.

Suggested Citation

  • Ghassen Allani & Yves Mard, 2021. "Dividend Policy and Earnings Quality: the French Evidence," Post-Print hal-04389466, HAL.
    • Handle: RePEc:hal:journl:hal-04389466
    as

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