Original scientific paper
https://doi.org/10.1080/1331677X.2022.2097106
Cash dividends, return on equity and earnings persistence
Wenzhou Li
Zhang Jingqi
Liang Chen
Abstract
With reference to Ohlson’ model, we optimise earnings persistence
model and express earnings persistence measure as a function
of return on equity (R.O.E.), dividends payout ratio and other
factors. Our theoretical model reveals that dividends payout ratio
has little effect on the earnings persistence, while R.O.E. has a
decisive effect on earnings persistence. Using quarterly earnings
data of 872 listed firms in China over 2011–2020, we calculate the
Revised Persistence value of earnings (RPer value) of our earnings
persistence model, and find that the Rper value of our model
have more explanatory power than that of Kormendi and Lipe’
model. Our study also suggest that quarterly earnings are useful
and have information content. Both the theoretical model and
empirical results of our research are of great significance to
understand and support the implementation of semi-compulsory
cash dividends rules in China.
Keywords
cash dividends; return on equity (R.O.E.); earnings persistence
Hrčak ID:
304228
URI
Publication date:
31.3.2023.
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