The pricing of dividend consistency

Dobson, John; Tawarangkoon, Wuttipan; Dufrene, Uric

doi:10.1007/bf02920891

Cited by 4 publications

(3 citation statements)

References 40 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In particular, Dielman and Oppenheimer (1984) find that announcements of dividend omissions for firms with a reputation for dividend consistency trigger a significantly more negative market reaction than for other firms. However, Dobson, Tawarangkoon, and Dufrene (1996) find that dividend consistency is not priced for most significant dividend change announcements. We extend prior research by introducing the notion of ''loss reliability.…”

Section: Introductionmentioning

confidence: 81%

“…Moreover, earlier studies by Dielman and Oppenheimer (1984) and Dobson, Tawarangkoon, and Dufrene (1996) shed light on the role of dividend consistency by examining whether market reactions to dividend change announcements are affected by a firm's dividend payment history. Although Dielman and Oppenheimer (1984) find evidence to support the view that in the event of a dividend omission, investor reaction is more negative the longer the firm's prior payment history, this result is not confirmed by Dobson, Tawarangkoon, and Dufrene (1996). Nevertheless, although both studies address the interaction of the information content of dividends and dividends consistency, they do not take into account that the information content of dividends varies, depending on the characteristics of current earnings.…”

Section: Background Motivation and Hypothesis Developmentmentioning

confidence: 99%

See 1 more Smart Citation

Losses, Dividend Reductions, and Market Reaction Associated with Past Earnings and Dividends Patterns

Charitou

Lambertides

Theodoulou

2011

Journal of Accounting, Auditing & Finance

View full text Add to dashboard Cite

This paper examines investors’ reactions to dividend reductions or omissions conditional on past earnings and dividend patterns for a sample of eighty-two U.S. firms that incurred an annual loss. We document that the market reaction for firms with long patterns of past earnings and dividend payouts is significantly more negative than for firms with less-established past earnings and dividends records. Our results can be explained by the following line of reasoning. First, consistent with DeAngelo, DeAngelo, and Skinner (1992) , a loss following a long stream of earnings and dividend payments represents an unreliable indicator of future earnings. Thus, established firms have higher loss reliability than less-established firms. Second, because current earnings and dividend policy are a substitute source of means of forecasting future earnings, lower loss reliability increases the information content of dividend reductions. Therefore, given the presence of a loss, the longer the stream of prior earnings and dividend payments, (1) the lower the loss reliability and (2) the more reliably dividend cuts are perceived as an indication that earnings difficulties will persist in the future.

show abstract

Section: Introductionmentioning

confidence: 81%

Section: Background Motivation and Hypothesis Developmentmentioning

confidence: 99%

Losses, Dividend Reductions, and Market Reaction Associated with Past Earnings and Dividends Patterns

Charitou

Lambertides

Theodoulou

2011

Journal of Accounting, Auditing & Finance

View full text Add to dashboard Cite

show abstract

“…Baker and Powell (2000) found a strong link between past and current dividend decisions. Also, Dobson et al (1996) found that dividend consistency is not priced in financial markets except in the case of dividend resumptions. For financial executives, this result may be counter‐intuitive because firms often devote resources to the stable dividend payment pattern over time.…”

Section: Survey Findingsmentioning

confidence: 99%

A survey of management views on dividend policy in Iranian firms

Omid

2009

International Journal of Islamic and Middle Eastern Finance and Management

View full text Add to dashboard Cite

PurposeThe purpose of this paper is to investigate the views of chief financial officers (CFOs) of Iranian firms listed on the Tehran Stock Exchange about the factors influencing dividend policy in 2006. The paper aims to update and extend previous research on dividend policy to capture the determinants of the dividend policy of Iranian firms.Design/methodology/approachSurvey instruments were used to identify the factors that CFOs consider in formulating dividend policy, based on both theoretical and empirical works on dividends, to identify the factors that are most important in dividend policy of firms.FindingsThe findings show that the most important determinants of a firm's dividend policies are the stability of cash flow, the availability of profitable investment opportunities, and stability of profitability. Also, industry type appeared to influence the importance that respondents placed on one determinant of dividend policy.Research limitations/implicationsIt is likely that the firms that did not respond on time may show a non‐response bias. Despite lacking normal precautionary steps to increase the response rate, non‐response bias may affect the findings. Another limitation of the survey methodology was that it measures beliefs and not necessarily actions. Therefore, caution should be taken in generalizing the findings.Practical implicationsThe findings have implications for CFOs in formulating dividend policy.Originality/valueThe paper updates and extends previous research on dividend policy to capture the determinants of the dividend policy of Iranian firms.

show abstract

Dividend policy issues in regulated and unregulated firms: a managerial perspective

Baker

Powell

1999

Managerial Finance

View full text Add to dashboard Cite

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. Uni ver sity Pro fes sor of Fi nance, The Ameri can Uni ver sity, Ko god College of Busi ness Ad min istra tion, De part ment of Fi nance and Real Es tate, 4400 Mas sa chusetts Ave nue, NW Wash ing ton, DC 20016-8044 and Gary H. Pow ell, As so ci ate Pro fes sor of Fi nance, Hood Col lege, De part ment of Eco nom ics and Man age ment, Fre der ick, Maryland 21701The Authors thank Ni raj Gupta for his re search as sis tance. Ab stractThis study com pares the views of 170 sen ior man ag ers of regu lated (utili ties) and un regulated (manu fac tur ing) US cor po ra tions listed on the New York Stock Ex change about several divi dend pol icy is sues. Spe cifi cally, the study ex am ines re spon dents' views about fou r ex pla na tions for pay ing divi dends and 20 fac tors in flu enc ing divi dend pol icy. The re sul ts sug gest that all four ex pla na tions for pay ing divi dends (sig nal ing, bird-in-the-hand, ta x pref er ence, and agency costs) re ceive some sup port, but the sig nal ing ex pla na tion re ceive d more sup port than the other ex pla na tions. The evi dence also sug gests that the most im portant de ter mi nants of a com pa ny's divi dend pol icy were the level of cur rent and ex pected future earn ings and the pat tern or con ti nu ity of past divi dends. These fac tors have re mained re marka bly simi lar over time. Fi nally, regu lated and un regu lated com pa nies rank fac tors in flu enc ing divi dend pol icy more simi larly to day than in the past. This find ing may re flec t the chang ing eco nomic en vi ron ment for utili ties.

show abstract

The pricing of dividend consistency

Cited by 4 publications

References 40 publications

Losses, Dividend Reductions, and Market Reaction Associated with Past Earnings and Dividends Patterns

Losses, Dividend Reductions, and Market Reaction Associated with Past Earnings and Dividends Patterns

A survey of management views on dividend policy in Iranian firms

Dividend policy issues in regulated and unregulated firms: a managerial perspective

Contact Info

Product

Resources

About