Dividend Changes Do Not Signal Changes in Future Profitability
نویسندگان
چکیده
One of the most important issues in corporate finance is whether dividend changes contain information about future earnings and profitability. Although dividend signaling theories imply that dividend increases signal better prospects (e.g., Bhattacharya 1979; John and Williams 1985; andMiller and Rock 1985), many empirical studies have failed to support this idea. Studies by Watts (1973), Gonedes (1978), Penman (1983), DeAngelo, DeAngelo, and Skinner (1996), Benartzi, Michaely, and Thaler (1997), and Grullon,Michaely, and Swaminathan (2002) find little or no evidence that dividend changes predict abnormal increases in earnings. Similarly, evidence based on surveying and interviewing hundreds of financial
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