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Journals / Gaziantep Üniversitesi Sosyal Bilimler Dergisi / 2016 / Cilt: 15 - Sayı: 4

Asymmetric Information and Signaling Theory: Panel Causality Approach on the Relationship between Dividends and Earnings

Yunus KILIÇ
Mehmet Fatih BUĞAN
B. Dilek ÖZBEZEK
Pages
1132–1145
Publication Date
2016-10-28
DOI
—
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AI Summary & Key Takeaways

AI Insight
⚡ TL;DR(Too Long; Didn't Read)

Obtained findings have pointed out that, in most companies, earnings are more effective in identifying future dividends.

📌 3 Key Takeaways

🎯
Objective & Hypothesis:It has been long debated how, with what methods, to what extent, and how much should the earnings obtained in companies be distributed so as to maximize the market value of companies.
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Key Findings & Data:In this study, the relationship between dividends and earnings per share for the period between 1990 and 2014 has been studied using two different panel causality tests and the asymmetric-information-based signal effect has been analyzed for individual companies.
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Conclusion & Impact:Obtained findings have pointed out that, in most companies, earnings are more effective in identifying future dividends.
🔬Design:Research Article
📍Scope:2014 Verileri
⚙️Variables:Signaling Theory · Earnings per Share · Dividends

Abstract

It has been long debated how, with what methods, to what extent, and how much should the earnings obtained in companies be distributed so as to maximize the market value of companies. The extent of the dividends any company would distribute to its stakeholders undoubtedly depends on the profitability situation of the relevant period. However, the distributed dividends provide reliable information concerning the future earnings of the company. For this reason, the short- and long-time relationship between dividends and earnings should be evaluated in a bidirectional way. In this study, the relationship between dividends and earnings per share for the period between 1990 and 2014 has been studied using two different panel causality tests and the asymmetric-information-based signal effect has been analyzed for individual companies. As a result of the tests conducted, a weak causality relationship has been detected between changes in dividends and companies’ future earnings. Obtained findings have pointed out that, in most companies, earnings are more effective in identifying future dividends.

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Cite This Article

KILIÇ, Y., BUĞAN, M. F., ÖZBEZEK, B. D. (2016). Asymmetric Information and Signaling Theory: Panel Causality Approach on the Relationship between Dividends and Earnings. Gaziantep Üniversitesi Sosyal Bilimler Dergisi, Cilt: 15 - Sayı: 4, 1132–1145. https://ajindex.com/articles/70186

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