Dividend Policy and Earnings Quality: the French Evidence

Ghassen Allani () and Yves Mard ()
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Ghassen Allani: UPHF - Université Polytechnique Hauts-de-France, LARSH - Laboratoire de Recherche Sociétés & Humanités - UPHF - Université Polytechnique Hauts-de-France - INSA Hauts-De-France - INSA Institut National des Sciences Appliquées Hauts-de-France - INSA - Institut National des Sciences Appliquées
Yves Mard: CleRMa - Clermont Recherche Management - ESC Clermont-Ferrand - École Supérieure de Commerce (ESC) - Clermont-Ferrand - UCA [2017-2020] - Université Clermont Auvergne [2017-2020]

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Abstract: This study examines the impact of dividend policy on earnings quality in the French context. Using 10 measures of earnings quality, we find a positive relation between dividend-paying policy and earnings quality, for measures of earnings quality based on accruals earnings, earnings time-series and investor responsiveness to earnings. We also observe that dividend payers smooth earnings more aggressively than dividend non-payers do. Additional analyses show that dividend payers use accruals to smooth earnings and strengthen earnings persistence. Our results reconcile the findings of previous studies, and question the particular status of smoothing among earnings management behaviors. They suggest that smoothing may be a desirable practice of earnings management (Graham et al 2005), supporting dividend policy.

Keywords: Dividend policy; Earnings quality; Earnings smoothing (search for similar items in EconPapers)
Date: 2021-06-16
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Published in 42è Congrès Association Francophone de Comptabilité, EM Lyon, Jun 2021, Lyon, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04389466

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