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.

Keywords

Authors and Affiliations

Köln, Germany

Christian Müller

About the author

Dr. Christian Müller received his doctoral degree from the University of Cologne under the supervision of Prof. Dr. Carsten Homburg (Department of Business Administration and Management Accounting).

Bibliographic Information

Book Title: Confirming Dividend Changes and the Non-Monotonic Investor Revision of Earnings Persistence
Authors: Christian Müller
Series Title: Quantitatives Controlling
DOI: https://doi.org/10.1007/978-3-658-04473-2
Publisher: Springer Gabler Wiesbaden
eBook Packages: Business and Economics, Business and Management (R0)
Copyright Information: Springer Fachmedien Wiesbaden 2014
Softcover ISBN: 978-3-658-04472-5Published: 27 December 2013
eBook ISBN: 978-3-658-04473-2Published: 30 December 2013
Series ISSN: 2945-8390
Series E-ISSN: 2945-8404
Edition Number: 1
Number of Pages: XXV, 137
Number of Illustrations: 8 b/w illustrations
Topics: Accounting/Auditing, Business and Management, general, Finance, general

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Table of contents (7 chapters)

Front Matter

Introduction

The Dividend Irrelevance Theorem and Competing Dividend Theories

The Incremental Importance of Dividend Changes in Signaling Earnings Persistence – A Theoretical Analysis

Dividend Changes Conveying Earnings Persistence Conditional on Past Time-Series Persistence – An Empirical Analysis

The Incremental Importance of Confirming Dividend Changes in Signaling Earnings Persistence Conditional on Earnings Quality

Concluding Remarks

Appendix

Back Matter

About this book