Dividend and Earnings quality: Evidence from Thailand
Post by MSF Chula at Friday, 21 December 2018 11:33 AM

This paper studies about the relationship between dividend payout and earnings quality for Thai listed firms during 2002-2016. Three dividend features of dividend-paying status, magnitude of dividend and dividend changes are studied with earnings quality proxies of earnings persistence, absolute values of discretionary accrual and accrual quality. Different models are used to find earnings quality proxies and panel regression model is used for testing hypotheses. First, Thai listed firms show that dividend paying firms are associated with more persistent earnings and higher accrual quality but are not associated with management discretionary accrual. Second, there is evidence that large dividend paying firms have higher accrual quality and lower management discretionary accrual comparing with small dividend paying firms but are not associated with earnings persistence. Last, firms that increase in dividend payout ratio or increase in dividend payment rate have association with earnings quality of having lower management discretionary accrual than firms that decrease in dividend payout ratio or decrease in dividend payment rate. It shows that dividend-paying status, dividend size and dividend changes provide information about earnings quality for Thai listed firms. Comparing to previous studies in U.S. market, Thai dividend paying firms have similar results of earnings persistence and accrual quality but do not have the same result of the absolute value of discretionary accrual. The result of dividend size is consistent but there is no comparative result for dividend changes. Comparing to previous studies in emerging markets, Thai dividend paying firms have similar results of earnings persistence and accrual quality but do not have the same result of the absolute discretionary accrual. The result of dividend size is consistent and dividend changes are consistent. Comparing to previous study in Thailand, the result is not consistent that dividend payment has no association with management discretionary accrual comparing with the result of dividend yield being earnings quality signal of having strong relationship of total accrual.

Last updated at Friday, 21 December 2018 11:33 AM