Dividends and Subsequent Profitability: An Examination of a Dual Dividend Stock Market

Chin-Sheng Huang (), Chun-Fan You and Hsiao-Fen Hsiao ()
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Chin-Sheng Huang: Department of Finance, National Yunlin University of Science and Technology, Douliou 64002, Taiwan
Chun-Fan You: Department of Finance, TransWorld University, Douliou 64063, Taiwan
Hsiao-Fen Hsiao: Department of Accounting, Ningbo University, Ningbo 315211, P. R. China

Review of Pacific Basin Financial Markets and Policies (RPBFMP), 2017, vol. 20, issue 01, 1-35

Abstract: This study examines the association between dual dividend changes and future profitability. A fundamental characteristic of dual dividend payouts is that both components, cash dividends and stock dividends, emit separate dividend signals for subsequent profitability. To analyze dividend signal theories, this study partitions the sample into three sub-samples according to the ratio of cash to stock dividends. Empirical evidence strongly indicates that dual dividend changes are positively associated with future profitability in the balanced dividend subsample. The results of this study are generally robust in terms of accommodating the factors of stock repurchases, investment growth opportunities, and business cycles.

Keywords: Dividend; dividend change; dual dividend; dividend signal (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S0219091517500023

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