| Summary: | 碩士 === 輔仁大學 === 管理學研究所 === 96 === This paper examines the relation between dividend changes and company future earning that is the management of company uses dividend to convey information about future earnings prospects. When company pays cash dividend to stockholder, it must consider the liquidity of the company. Therefore, this study not only examines the relation between total dividend and the company future earnings, but also examines the relation between the dividend changes and the company future earnings.
The company announces the dividend policy based on past performance. Therefore, this paper combines dividend announcement with past unexpected earnings to examine changes in future earnings.
The study period covers from 1999 to 2007 and consist of 2399 observations. First, based on dividend changes and past earning changes observes the earning changes after announcement. Second, I used the least square regress method to examine the relation between dividend changes and future earnings. The empirical results in this study are summarized as follows:
1.When the earning forecast is a linear model, increase in adjusted cash dividend convey information in future earnings increase. But decrease in adjusted cash dividend doesn't have future earnings information. When earning expectation is nonlinear model, total dividend changes and future earnings before extraordinary items has positive relation. Total dividend changes and short-term future net income has positive relation.
2.Changes in dividend and past earning are the same direction, it is unable to expect future earnings has the same changes.
3.When company decreases dividend announcement and past earnings increase is earnings per share changes rate under average, expect future earnings doesn't increase.
4.When company increases dividend announcement and past earnings decrease is earnings per share changes rate before industry factors under average, expect future earnings doesn't reduce.
5.Combing dividend changes with past earning changes to observe long-term and short-term earning changes, there is no consistency among groups, so dividend changes announcement doesn't have earnings signal content.
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