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| Author: | Brook, Y. |
| Title: | Do firms use dividends to signal large future cash flow increases? |
| Journal: | Financial Management
1998 : AUTUMN, VOL. 27:3, p. 46-57 |
| Index terms: | FINANCE MANAGEMENT CASH FLOW |
| Language: | eng |
| Abstract: | The authors find that firms poised to experience large, permanent cash flow increases after four years of flat cash flow tend to boost their dividends before their cash flow jumps. These firms also have a high frequency of relatively large dividend increases prior to the cash flow shock. Investors appear to interpret the dividend changes as signals about future profitability: firms that sharply increase their dividends earn large market-adjusted stock returns in the year before their cash flow rises. |
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