ENGLISH

Confirming Dividend Changes and the Non-Monotonic Investor Revision of Earnings Persistence

By Christian Müller (auth.)

Book information

Publisher
Gabler Verlag
Year
2014
ISBN
978-3-658-04472-5, 978-3-658-04473-2
DOI
10.1007/978-3-658-04473-2
Language
english
Format
PDF
Filesize
36 MB (37464185 bytes)
Series
Quantitatives Controlling
Edition
1
Pages
137\157
Time added
2014-02-12 18:00:00
Accounting/Auditing; Business/Management Sciencegeneral; Finance/Investment/Banking

Description

The stylized facts that firms pay and investors react to dividends disregard dividend neutrality. Taking on the perspective that informational asymmetries are the central determinant for dividend value relevance, Christian Müller assumes that firm’s dividend decision conveys useful information to investors. He shows that investors use dividend changes to revise their a priori expectations about the persistence of a current earnings change. While his theoretical and empirical analyses generally imply that dividend changes constitute informative, but imperfect information signals, he further identifies situations in which they are substantial to investors. Christian Müller’s research comprehensively examines the informational role of dividend policy and provides new insights to the corresponding Bayesian investor learning process.

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