Variables Influencing Dividend Policy In Australia: Survey Results

The Influence of Company Financial Performance on the Interpretation of Dividend and Earnings Signals: A Study of Accounting- And Market-Based Data

“…3 Although Brittain (1966) observed that Lintner's behavioural model could be improved by replacing the profit variable with a cashflow variable, a later study by Fama & Babiak (1968) concluded that the original Lintner model performed well relative to its competitors and, in particular, the use of a net profit variable yielded results that were superior to those of models which employed a cashflow variable. Subsequent studies based on questionnaire surveys of managers' views on dividend policy have confirmed Lintner's early suggestions and revealed that executives generally emphasize past as well as current and future earnings performance in dividend policy decisions (Baker, Farrelly & Edelman, 1985;Partington, 1989;Allen, 1992). Healy & Palepu (1988) found that the 'dividend-initiating' firms in their sample of US companies experienced earnings growth which started at least a year before the dividend announcement and noted that this growth was maintained throughout the year of the dividend initiation and continued for 2 subsequent years.…”

Survey and Market‐based Evidence of Industry‐dependence in Analysts’ Preferences Between the Dividend Yield and Price‐earnings Ratio Valuation Models

“…Or, less strongly, the dividend yield model will be value-relevant if the dividend is reliably used by management as a signal of value. Whilst it is clearly not necessarily the case that the dividend is used in this way (Miller and Modigliani, 1961) there is some empirical evidence to support the proposition that it might be (survey evidence includes Lintner, 1956;Partington, 1989;and Barker, 1999; and market-based evidence includes Aharony and Swary, 1980;and Healy and Palepu, 1988 ± though see also Benartzi, Michaely and Thaler, 1997).…”

The post–announcement performance of dividend–changing companies: The dividend–signalling hypothesis revisited

“…An alternative body of literature suggests that the managers consider past and current financial performance as well as the expectations of future performance of the companies when making their dividend policy decisions (see Lintner, 1956;Baker et al, 1985;Wansley and Lane, 1987;Healy and Palepu, 1988;Partington, 1989;Allen, 1992;De Angelo and De Angelo, 1990;De Angelo et al, 1992;Abeyratna et al, 1996). On the basis of this evidence, it seems reasonable to assume, in the context of the dividend-signalling hypothesis, that the dividendincreasing companies should outperform their dividend-decreasing counterparts with respect to financial profiles during the post-announcement periods.…”