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This document discusses a study examining the association between dividend payout ratios and future earnings growth. Specifically, it will analyze dual dividend payout ratios of both cash and stock dividends. The study uses data from 2000-2004 of listed Taiwanese companies, excluding financial firms. It will employ two models to assess this association and examine factors like firm size, profitability, risk and investment that may influence any relationship found.
This document discusses a study examining the association between dividend payout ratios and future earnings growth. Specifically, it will analyze dual dividend payout ratios of both cash and stock dividends. The study uses data from 2000-2004 of listed Taiwanese companies, excluding financial firms. It will employ two models to assess this association and examine factors like firm size, profitability, risk and investment that may influence any relationship found.
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This document discusses a study examining the association between dividend payout ratios and future earnings growth. Specifically, it will analyze dual dividend payout ratios of both cash and stock dividends. The study uses data from 2000-2004 of listed Taiwanese companies, excluding financial firms. It will employ two models to assess this association and examine factors like firm size, profitability, risk and investment that may influence any relationship found.
Hak Cipta:
Attribution Non-Commercial (BY-NC)
Format Tersedia
Unduh sebagai PPTX, PDF, TXT atau baca online dari Scribd
• The main issue to be addressed in this study is the
attempt to determine the association between dividend payout ratios and future earnings growth. • It is already well known that the payout ratios of cash dividends are subject to the “free cash flow” hypothesis, and that those of stock dividends are subject to the “retained earnings” hypothesis. • In addition, there is, as yet, no theory or hypothesis in existence capable of explaining dual dividends hypothesize • They found the hypothesize that if managers adopt dual dividends, there are two-tier implications, the first of which is the use of certain amounts of cash dividends to demonstrate both their self-discipline and the financial robustness of the company, whilst the second is the use of certain levels of stock dividends to convey the message of future optimistic growth. Hence, we surmise that, to this end, managers will choose an optimal cash-to-stock dividend ratio . We refer to the dividend distribution policy under this ratio as a balanced-dividend policy. Under a balanced-dividend policy, dual-dividend payout ratios will be positively associated with future earnings growth. Data • This article data used in this study were obtained from the Taiwan Economic Journal database. • The sample period for this study runs from 2000 to 2004. • In addition, the sample should be listed on either the Taiwan Stock Exchange (TSE), only firms in the non-financial industries and companies with incomplete financial data Model 1 • This study follows the procedures reported in Zhou and Ruland (2006) to assess the association between dividend payout ratios and future earnings growth. Model 2 • the interactions between dividend yields and the dividend payout ratios.
• EPSGRt 1 = α0 + β1Payoutt + β2Sizet +
β3ROAet + β4Betat + β5AGt + 1+ β6DivYieldt + β7DivYieldt*Payoutt + β8EPSGRt + et + • We examine why dividend payout ratios are associated with future earnings growth.
• EPSGRt + 1 = α0 + β1Payoutt + β2Sizet +
β3ROAet + β4Betat + β5AGt + 1 + β6DivYieldt + β7M/ At + β8M/ At⁎Payoutt + β9EPSGRt +et The association between future earnings growth & cash dividend payout ratios The association between future earnings growth and stock dividend payout ratios. The association between future earnings growth and dual dividend payout ratios. The association between future earnings growth and dual dividends by cash versus stock dividend ratios. Conclusion • This study highlighted that dual dividend had evidence to support the relation between payout ratios and future earnings growth. • Moreover, firm’s investment opportunities in Taiwan would not facing difficulties if their cash dividend were too large and their future earnings would not be restrained by large stock dividends. (C-S. Huang, 2009)