Dividend Changes and Future Profitability: Evidence from the Turkish Stock Market

Kadioglu, Eyup; Ocal, Nurcan

doi:10.5539/ijef.v8n3p196

Cited by 9 publications

(11 citation statements)

References 23 publications

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“…In testing signaling hypothesis, Benartzi et al (1997) did not come across any meaningful evidence that changes in the dividends provided any information related to future profitability. Kadioglu and Öcal (2016), working in Turkey, reached a similar result. Pettit (1977) and Baker and Wurgler (2004)'s studies reached results which support the clientele effect hypothesis.…”

Section: Literature Reviewsupporting

confidence: 58%

Determinants of Dividend Payout Decisions: A Dynamic Panel Data Analysis of Turkish Stock Market

Bostanci¹,

Kadioglu²,

Sayilgan

2018

IJFS

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This study analyzes the firm-specific factors affecting the dividend payout decisions of the companies whose shares are traded on the Borsa Istanbul stock exchange. To this end, the dynamic panel regression is applied to 853 observations of yearly average of 106 companies listed on the Borsa Istanbul between 2009 and 2015. According to results from the Arellano–Bover/Blunder-Bond two-step system generalized method of moments, a statistically significant positive effect on dividend payout was found in the relationship between the dividend payout of the previous year, the company’s return on equity and the market value/book value ratio, liquidity and the company’s size. The demonstration of a positive relationship between dividend payout and return on equity supports the free cash flow hypothesis and the positive relationship with the previous year’s dividend payout ratio supports the dividend smoothing hypothesis for Turkey.

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Section: Literature Reviewsupporting

confidence: 58%

Determinants of Dividend Payout Decisions: A Dynamic Panel Data Analysis of Turkish Stock Market

Bostanci¹,

Kadioglu²,

Sayilgan

2018

IJFS

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“…There is evidence both confirming and disproving the hypothesis in numerous other countries. Studies done on the stock market in Thailand (Fairchild, Guney & Thanatawee 2014), France and Portugal (Vieira & Raposo 2007) and Turkey (Kadıoğlu & Öcal 2016) failed to confirm the hypothesis.…”

Section: Current Dividends and Future Profits -A Review Of The Literamentioning

confidence: 95%

Changes in a Company’s Current Dividend Level and Their Impact on Future Profits – Theory and Practice

Zyguła

2018

KREM

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According to the signalling theory, investors draw conclusions concerning the future income potential of a given company based on the dividends it pays. According to one of the implications of this theory, changes made to a dividend should mirror the direction of future profits. This article presents an empirical analysis of the relationship between the current changes in the level of a dividend paid (t 0) and future company profitability (t + 1, t + 2). The companies examined were all traded on the Warsaw Stock Exchange and paid dividends in the years 2001-2013. The research shows that there is no statistically significant relationship between the dividend paid in a given year and the future results obtained by the companies examined.

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“…However, in the case of dividend reductions, the authors do not confirm the existence of specific links between ROE and dividend changes. Just as numerous studies more or less confirm the existence of links in line with the signaling hypothesis in the markets, the same hypothesis has been rejected using samples of companies listed in stock markets in Turkey (Kadioglu and Ocal, 2016), Thailand (Fairchild et al, 2014), Portugal (Vieira and Raposo, 2007).…”

Section: Informational Content Of Dividends In the Polish Capital Marketmentioning

confidence: 99%

“…Existing efforts to examine the above issues have been conducted mostly in developed markets using the event analysis or cointegration and causality tests (Garrett and Priestley, 2000;Mougoué and Rao, 2003). On the contrary, the research conducted in emerging markets has been partially affected by limitations in the data availability and estimation techniques (Fairchild et al, 2014, Lee et al, 2012Kadioglu and Ocal, 2016). Nevertheless, more research still needs to address specific issues related to emerging markets and their formal and legal ineffectiveness (Wrońska, 2009;Brycz and Pauka, 2013;Rupeika-Apoga et al, 2018).…”

Section: Introductionmentioning

confidence: 99%

Are Emerging Markets Efficient? Evidence from Informational Content of Dividend Changes in Polish Stock Market

Snarska¹,

Tomasz²,

Zyguła³

2020

ERSJ

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Purpose: The objective of this paper is to present the dividend signaling hypothesis, in particular, an empirical analysis of the relationship between the current changes in the level of a dividend paid (t0) and the future profitability of the companies. Design/Methodology/Approach: The dividend signaling hypothesis is empirically tested using the dynamic causality analysis based on the regression approach monitoring for expected earnings changes and past returns with a set of linear and non-linear controls. The conducted analyses comprised the domestic companies quoted on the Warsaw Stock Exchange, which paid dividends in 2001-2016. Findings: The empirical results confirm that in the audited period, dividend decisions bring some information about the current situation (t = 0) and future (t = 1, t = 2) of the analyzed companies. It is also worth noting that among the analyzed indicators, the gross profit ratio (PBT) referred either to the market value or the book value of equity was most often in the statistically significant analyzes. In general, our results confirm the validity of the signaling hypothesis in the case of continuation-growth and initiation of payments in the Polish capital market as in the developed market. Practical Implications: We can say that investors, based on "signals" coming out of dividends advertisements, may conclude the future-income potential of a given company. Originality/value: As mentioned, the gross profit ratio (PBT) referred either to the market value or the book value of equity was most often in the statistically significant analyses. Thus, it seems that, contrary to the adopted assumptions in the literature, gross profit (PBT) in dividend signaling is more important than net profit (E).

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Dividend Changes and Future Profitability: Evidence from the Turkish Stock Market

Cited by 9 publications

References 23 publications

Determinants of Dividend Payout Decisions: A Dynamic Panel Data Analysis of Turkish Stock Market

Determinants of Dividend Payout Decisions: A Dynamic Panel Data Analysis of Turkish Stock Market

Changes in a Company’s Current Dividend Level and Their Impact on Future Profits – Theory and Practice

Are Emerging Markets Efficient? Evidence from Informational Content of Dividend Changes in Polish Stock Market

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