Attention to dividends, inattention to earnings?

• 成果类型: Article
• 署名作者: Ham, Charles G.; Kaplan, Zachary R.; Utke, Steven
• 署名单位: Washington University (WUSTL); University of Connecticut
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-021-09642-4
• 发表日期: 2023
• 页码: 265-306
• 关键词: free cash flow; information-content; reporting environment; Investment decisions; capital-markets; trading volume; FIRMS; POLICY; disclosure; management

摘要

We examine whether dividends serve as substitutes or complements to accounting information in firm valuation. Consistent with dividends substituting for earnings information, we find that dividend paying firms have 11%-15% lower earnings response coefficients (ERCs) than non-payers. We find more substitution when the dividend provides a stronger signal of permanent earnings: when the firm is less likely to cut the dividend, when the firm is likely to fund the dividend out of earnings rather than cash reserves, or when the dividend is larger. We then show that dividend payers have lower absolute returns, less trading volume, and fewer analyst forecasts at the earnings announcement (EA), suggesting that dividend payers attract less attention to their less informative EAs. Finally, we show that the lower EA attention translates into less earnings management and fewer earnings-related disclosures for dividend payers relative to non-payers. Collectively, this evidence suggests that dividends supply information about permanent earnings and, although costly, could be an efficient way for some firms to satisfy investors' demand for earnings information.