This study estimates whether the market interprets changes in dividends as a signal about the persistence of past earnings changes. The prior research shows that past earnings changes are necessarily indicative of future earnings levels. The empirical study investigates whether a change in dividends alters investors ?assessments about the valuation implications of past earnings. Results confirm the hypothesis that changes in dividends cause investors to revise their expectations about the persistence of past earnings changes. However, these results are inconsistent to support that this effect varies predictably with the sign of the past earnings change and the magnitude of the dividend change.
PERSISTENCE OF PAST EARNINGS INFORMATION CONVEYED BY DIVIDEND CHANGES
Post by MSF Chula at Tuesday, 8 August 2017 10:35 AM
Last updated at Tuesday, 8 August 2017 10:35 AM