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Governance and earnings management surrounding dividend initiation

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Date Issued:
2012
Summary:
Essay I: Governance surrounding dividend initiation. According to the free cash flow hypothesis, managers prefer to invest surplus cash, even in value reducing projects, rather than release it to shareholders. Yet, previous studies of dividend payout conclude that managers pay more in dividends when they are entrenched, supporting the substitute model... The results indicate that initiating firms have stronger shareholder rights, in contrast with much of the prior research on continuous divident payout. Firms with lower entrenchment index are more likely to initiate dividends... Essay II: Earnings management surrounding dividend initiation. Prior research tests earnings management surrounding changes in dividend payout and researchers conclude that the earnings management is a means of amplifying the dividend signal to the market. However, dividend initiation is a unique event. If initiation represents signaling, similar to a dividend increase, then management will manage earnings upward. If, on the other hand, divident initiation is better explained by the free cash flow hypothesis, then initiation may be entered into with caution or reluctance by management.
Title: Governance and earnings management surrounding dividend initiation.
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Name(s): Smith, Deborah Drummond.
College of Business
Department of Finance
Type of Resource: text
Genre: Electronic Thesis Or Dissertation
Date Issued: 2012
Publisher: Florida Atlantic University
Physical Form: electronic
Extent: xii, 177 p. : ill.
Language(s): English
Summary: Essay I: Governance surrounding dividend initiation. According to the free cash flow hypothesis, managers prefer to invest surplus cash, even in value reducing projects, rather than release it to shareholders. Yet, previous studies of dividend payout conclude that managers pay more in dividends when they are entrenched, supporting the substitute model... The results indicate that initiating firms have stronger shareholder rights, in contrast with much of the prior research on continuous divident payout. Firms with lower entrenchment index are more likely to initiate dividends... Essay II: Earnings management surrounding dividend initiation. Prior research tests earnings management surrounding changes in dividend payout and researchers conclude that the earnings management is a means of amplifying the dividend signal to the market. However, dividend initiation is a unique event. If initiation represents signaling, similar to a dividend increase, then management will manage earnings upward. If, on the other hand, divident initiation is better explained by the free cash flow hypothesis, then initiation may be entered into with caution or reluctance by management.
Identifier: 856904777 (oclc), 3362041 (digitool), FADT3362041 (IID), fau:4156 (fedora)
Note(s): by Deborah Drummond Smith.
Thesis (Ph.D.)--Florida Atlantic University, 2012.
Includes bibliography.
Mode of access: World Wide Web.
System requirements: Adobe Reader.
Subject(s): Investment analysis
Portfolio management
Dividends -- Econometric models
Persistent Link to This Record: http://purl.flvc.org/fcla/dt/3362041
Use and Reproduction: http://rightsstatements.org/vocab/InC/1.0/
Host Institution: FAU