Do Dividends Signal Future Earnings in the Nordic Stock Markets?
40 Pages Posted: 8 Dec 2012 Last revised: 4 May 2015
Date Written: November 21, 2012
We study the informational content of dividends on three Nordic civil law markets, i.e. on markets where the evidence for dividend catering has been weak. Using aggregate data on real earnings per share and payout ratios, long time series from 1969 to 2010, and methodologies which address problems of endogeneity, non-stationarity and autocorrelation (including a VECM approach), we find evidence on dividend signaling as well as the stickiness of dividends. However, we also find heterogeneity in the relationship between dividends and earnings on markets similar in many respects, suggesting that even small variations in the institutional surroundings may be important for the results.
Keywords: Dividend Signaling, Nordic Markets, VECM
JEL Classification: G35, G15, C32
Suggested Citation: Suggested Citation