| Summary: | 碩士 === 開南大學 === 財務金融學系 === 97 === The issue that how much cash should be paid as dividends is repeatedly and regularly discussed in firms, but the motivation of the firms to pay dividends is still controversial. A prediction proposed by “cash flow signalling hypothesis” indicates that dividends signal for future profitability. While some research provides evidence supporting the hypothesis, some research proposes that dividends only reflect concurrent earning performance. Hence, by employing the categorical analysis and multiple regression models, this study mainly examines the explanatory power of dividend changes on future earning changes. Considering the possible time-serial and cross-sectional dependence in residuals, Fama and MacBeth (1973) regression approach is employed to estimate the models. Given the evidence presented in this study, the results of the categorical analysis are consistent with those of multiple regression, showing that dividend changes mainly reflect concurrent earning performance , but not future earnings.
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