Journal ArticleDOI
The Association Between Operating Cash Flows and Dividend Changes: An Empirical Investigation
Andreas Charitou,Nikos Vafeas +1 more
TLDR
In this paper, the authors re-evaluate and extend prior studies by examining the incremental ability of cash flows to explain dividend changes, given earnings, and argue that a positive relationship between cash flows and dividend changes should exist due to liquidity and accruals management considerations.Abstract:
The Association between earnings and dividend changes has been established since Lintner’s (1956) pioneering work. Subsequent research attempted to establish an association between operating cash flows and dividend changes, given earnings, without success (Simons, 1994). Recently, there has been increased attention in cash flow reporting. Regulatory bodies worldwide have stressed the significance of cash flow information in capital markets. Research on the association between cash flows and dividends has been limited, yielding inconclusive results. The purpose of this study is to re-evaluate and extend prior studies by examining the incremental ability of cash flows to explain dividend changes, given earnings. We argue that a positive relationship between cash flows and dividend changes should exist due to liquidity and accruals management considerations. The empirical evidence of this study supports that the dividend changes-cash flow relationship is significantly positive (a) when operating cash flows are low compared to earnings, and (b) when firm growth is moderate.read more
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Journal ArticleDOI
Predicting corporate failure: empirical evidence for the UK
TL;DR: In this paper, the authors examined the incremental information content of operating cash flows in predicting financial distress and thus developed reliable failure prediction models for UK public industrial firms, which can be used to assist investors, creditors, managers, auditors and regulatory agencies in the UK to predict the probability of business failure.
Journal ArticleDOI
An empirical study of dividend policy of quoted companies in nigeria
WA Adesola,AE Okwong +1 more
TL;DR: In this paper, the authors evaluated the observed dividend policy of a cross section of 27 Nigeria quoted companies using theories tested to explain dividend behavior of those firms and found that the traditional factors are significant in explaining and predicting their dividend decision within the period under review.
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Impact of financial leverage on dividend policy: Empirical evidence from Karachi Stock Exchange-listed companies
TL;DR: In this paper, the relationship between dividend policy and financial leverage of 403 companies, listed with Karachi Stock Exchange during the period 2002 to 2008, was examined by applying the extended model of Linter (1956) with the debt ratio of the firm, the previous year's dividend yield as its independent variables and change in earnings as a dummy variable.
Journal ArticleDOI
An Empirical Analysis of the Relationship between Cash Flow and Dividend Changes in Nigeria
TL;DR: This article carried out an 882 firm-year study by analysing the dividend changes-cash flow relationship on a sample of 63 quoted firms in Nigeria over a wider testing period from 1984 to 1997.
Journal ArticleDOI
The role of cash flows and accruals in explaining security returns: evidence for the UK
TL;DR: In this article, the authors extend the growing empirical literature on the association of earnings and cash flows with security returns and find that the relationship between cash flows and security returns improves when the operating cycle, magnitude of accruals and measurement interval are taken into account.