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| Tekijä: | Daniel, N.D. Denis, D.J. Naveen, L. |
| Otsikko: | Do firms manage earnings to meet dividend tresholds? |
| Lehti: | Journal of Accounting & Economics
2008 : MAR, VOL. 45:1, p. 2-26 |
| Asiasana: | earnings dividend policy managers companies |
| Kieli: | eng |
| Tiivistelmä: | When dividend-paying firms' earnings would otherwise fall short of expected dividend levels, the firms tend to manage earnings upward. The behavior like this is evident only in firms that have positive debt and it is more aggressive prior to the Sarbanes-Oxley Act, subsequent to the 2003 dividend tax cut, in high-payout firms, in firms whose CEOs receive higher dollar dividends and have higher pay-performance sensitivities, and in firms that raise less outside equity. Furthermore, this earnings management behavior seems to significantly impact the likelihood of a dividend cut. This paper has a hypothesis that firms manage earnings upwards when they anticipate that 'pre-managed' earnings will be lower than expected dividend payments. The study uses a primary sample that consists of the S&P 1500 firms listed on Compustat's Execucomp database for the period 1992-2005. The findings in the study imply, among others, that managers treat expected dividend levels as an important earnings treshold. |
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