TY - JOUR
T1 - The accuracy of analysts' dividend forecasts around the world
AU - Brown, Philip
AU - How, J.C.Y.
AU - Verhoeven, P.
PY - 2008
Y1 - 2008
N2 - We examine the link between the accuracy of consensus analysts' dividend forecasts, earnings predictability and dividend policies of firms in 39 countries from 1995 to 2004. For firms that display stronger dividend smoothing, as modeled by Lintner [Lintner, J., 1956. Distribution of incomes of corporations among dividends, retained earnings and taxes. American Economic Review 46, 97–113], there is a lower correlation between dividend and earnings forecast errors, with less of the earnings uncertainty being passed into dividend uncertainty. The link between earnings and dividend forecast errors is weaker in common-law, capital market-based countries and in countries with well-developed financial (debt and equity) markets, where firm managers have greater incentives to smooth dividends and to use dividends for signaling.
AB - We examine the link between the accuracy of consensus analysts' dividend forecasts, earnings predictability and dividend policies of firms in 39 countries from 1995 to 2004. For firms that display stronger dividend smoothing, as modeled by Lintner [Lintner, J., 1956. Distribution of incomes of corporations among dividends, retained earnings and taxes. American Economic Review 46, 97–113], there is a lower correlation between dividend and earnings forecast errors, with less of the earnings uncertainty being passed into dividend uncertainty. The link between earnings and dividend forecast errors is weaker in common-law, capital market-based countries and in countries with well-developed financial (debt and equity) markets, where firm managers have greater incentives to smooth dividends and to use dividends for signaling.
U2 - 10.1016/j.pacfin.2007.10.002
DO - 10.1016/j.pacfin.2007.10.002
M3 - Article
SN - 0927-538X
VL - 16
SP - 411
EP - 435
JO - Pacific-Basin Finance Journal
JF - Pacific-Basin Finance Journal
IS - 4
ER -