The Accuracy of Analysts' Dividend Forecasts Around the World

40 Pages Posted: 17 Jul 2008

See all articles by Philip R. Brown

Philip R. Brown

UWA Business School, M250; Financial Research Network (FIRN)

Janice C. Y. How

Queensland University of Technology; Financial Research Network (FIRN)

Peter Verhoeven

Queensland University of Technology - QUT Business School; Financial Research Network (FIRN)

Abstract

We examine the link between the accuracy of consensus analysts' dividend forecasts, earnings predictability and dividend policies of firms in 39 countries from 1995 to 2004. For firms that display stronger dividend smoothing, as modeled by Lintner (1956), there is a lower correlation between dividend and earnings forecast errors, with less of the earnings uncertainty being passed into dividend uncertainty. The link between earnings and dividend forecast errors is weaker in common-law, capital market-based countries and in countries with well-developed financial (debt and equity) markets, where firm managers have greater incentives to smooth dividends and to use dividends for signaling.

Keywords: analyst dividend forecasts, dividend policy, earnings predictability, world

JEL Classification: G15, G38, M40

Suggested Citation

Brown, Philip R. and How, Janice C. Y. and Verhoeven, Peter, The Accuracy of Analysts' Dividend Forecasts Around the World. Pacific-Basin Finance Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1068284

Philip R. Brown

UWA Business School, M250 ( email )

Crawley, Western Australia 6009
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Janice C. Y. How (Contact Author)

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

Peter Verhoeven

Queensland University of Technology - QUT Business School ( email )

GPO Box 2434
Brisbane, Queensland 4001
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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