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| Author: | Lee, B-S. Allen Yan, N. |
| Title: | The market's differential reactions to forward-looking and backward-looking dividend changes |
| Journal: | Journal of Financial Research
2003 : WINTER, VOL. 26:4, p. 449-468 |
| Index terms: | Dividend policy Dividends Earnings Market information Signaling |
| Language: | eng |
| Abstract: | Empirical evidence on the signaling hypothesis of dividends is weak and mixed. Recent studies have found that dividend changes reflect mostly current and past earnings but not future earnings. A model in which not all dividend changes contain new information about future earnings is provided in this paper. Some dividend decisions are backward looking (noninformation or nonsignaling events). The model helps identify two types of dividend changes and predicts that the market will respond strongly only to forward-looking dividend changes. |
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