Earning Quality and Dividend Policy

Document Type : Review Paper

Authors

1 Instructor of Accounting, Islamic Azad University, South Tehran Branch, Tehran, Iran.

2 MSc of Accounting, Shahid Beheshti University, Tehran, Iran

Abstract

The objective of this study is to find answers to this question that whether the earnings quality will impact on dividend payout policy at firms listed in the Tehran Stock Exchange? Dividend policy has been measured by dividend payout whereas earning management has been quantified by discretionary accruals. we use the Mcnicholz Model for measuring of accruals quality and modifies Jones model for measuring of earning management. Also, dividend payout ratio is used for measuring of dividend policy. The data set includes 105 companies listed in the Tehran Stock Exchange for the period of 2011 to 2015 (Including 525 firm-year). Regression analysis is used to examine hypotheses of the study. The result show that accrual quality has a positive and meaningful relationship with dividend policy. The empirical results indicate that there is no significant relationship between dividend payout policy and earning Management. Therefor dividend payout policy is not a function of earning management and this finding is a good news for investors.

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References

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History

  • Receive Date: 17 May 2017
  • Revise Date: 10 June 2017
  • Accept Date: 13 June 2017

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