The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era
Many theorists have linked dividends with the ability to carry signals regarding a firm’s expected financial performance. Despite being grounded on a sound theoretical framework, empirical evidence has failed to unanimously corroborate the dividend signalling hypothesis, with some authors resignedly...
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ndltd-netd.ac.za-oai-union.ndltd.org-unisa-oai-uir.unisa.ac.za-10500-264632020-07-09T03:27:24Z The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era Masocha, Faustina Ndlovu, Stephen Dividend signalling Dividend policy Dividend puzzle Financial peformance Profitability Liquidity Gearing Mean reversion Panel models 658.150968 Business enterprises -- South Africa -- Finance Dividends Corporations -- South Africa -- Finance Corporate profits Democracy -- South Africa Many theorists have linked dividends with the ability to carry signals regarding a firm’s expected financial performance. Despite being grounded on a sound theoretical framework, empirical evidence has failed to unanimously corroborate the dividend signalling hypothesis, with some authors resignedly concluding that dividends are the puzzle of finance literature. Recent empirical evidence has shown that limiting the dividend signalling hypothesis to earnings has contributed to that puzzle. To try and decipher the puzzle, this study extends the dividend signalling hypothesis to measures of financial performance seldom linked with dividend signalling such as liquidity and gearing. Using panel data regression models and data for 39 firms listed on the JSE from 1995 to 2016, the study reveal that when one controls for the mean reversion and autocorrelation of profitability, dividends lose the power to signal earnings. The results further show that managers in South Africa use dividends to signal expected changes in liquidity and gearing. Business Management M. Phil. (Accounting Sciences) 2020-06-10T08:16:56Z 2020-06-10T08:16:56Z 2017-11 Dissertation http://hdl.handle.net/10500/26463 en 1 online resource (xi, 175 leaves) application/pdf |
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Dividend signalling Dividend policy Dividend puzzle Financial peformance Profitability Liquidity Gearing Mean reversion Panel models 658.150968 Business enterprises -- South Africa -- Finance Dividends Corporations -- South Africa -- Finance Corporate profits Democracy -- South Africa |
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Dividend signalling Dividend policy Dividend puzzle Financial peformance Profitability Liquidity Gearing Mean reversion Panel models 658.150968 Business enterprises -- South Africa -- Finance Dividends Corporations -- South Africa -- Finance Corporate profits Democracy -- South Africa Masocha, Faustina The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era |
description |
Many theorists have linked dividends with the ability to carry signals regarding a firm’s expected financial performance. Despite being grounded on a sound theoretical framework, empirical evidence has failed to unanimously corroborate the dividend signalling hypothesis, with some authors resignedly concluding that dividends are the puzzle of finance literature. Recent empirical evidence has shown that limiting the dividend signalling hypothesis to earnings has contributed to that puzzle. To try and decipher the puzzle, this study extends the dividend signalling hypothesis to measures of financial performance seldom linked with dividend signalling such as liquidity and gearing. Using panel data regression models and data for 39 firms listed on the JSE from 1995 to 2016, the study reveal that when one controls for the mean reversion and autocorrelation of profitability, dividends lose the power to signal earnings. The results further show that managers in South Africa use dividends to signal expected changes in liquidity and gearing. === Business Management === M. Phil. (Accounting Sciences) |
author2 |
Ndlovu, Stephen |
author_facet |
Ndlovu, Stephen Masocha, Faustina |
author |
Masocha, Faustina |
author_sort |
Masocha, Faustina |
title |
The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era |
title_short |
The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era |
title_full |
The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era |
title_fullStr |
The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era |
title_full_unstemmed |
The signalling effect of dividends on future financial performance: a case of South African listed companies in the post-apartheid era |
title_sort |
signalling effect of dividends on future financial performance: a case of south african listed companies in the post-apartheid era |
publishDate |
2020 |
url |
http://hdl.handle.net/10500/26463 |
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