Do firms manage earnings to meet dividend thresholds?

• 成果类型: Article
• 署名作者: Daniel, Naveen D.; Denis, David J.; Naveen, Lalitha
• 署名单位: Purdue University System; Purdue University; Pennsylvania Commonwealth System of Higher Education (PCSHE); Temple University; Drexel University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2007.11.002
• 发表日期: 2008
• 关键词: option compensation; market performance; empirical-evidence; accruals; equity; Auditors; FUTURE; RISK; announcements; INFORMATION

摘要

Dividend-paying firms tend to manage earnings upward when their earnings would otherwise fall short of expected dividend levels. This behavior is evident only in firms with positive debt and 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. Moreover, this earnings management behavior appears to significantly impact the likelihood of a dividend cut. Our findings imply that managers treat expected dividend levels as an important earnings threshold. (c) 2007 Elsevier B.V. All rights reserved.