Do Dividends Signal Future Earnings in the Nordic Stock Markets?

40 Pages Posted: 8 Dec 2012 Last revised: 4 May 2015

See all articles by Eva Liljeblom

Eva Liljeblom

Swedish School of Economics and Business Administration

Sabur Mollah

Sheffield University Management School, University of Sheffield; Swansea Management School, Swansea University; Hull University Business School; Hull University Business School

Patrik Rotter

FE Education First

Date Written: November 21, 2012

Abstract

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

Liljeblom, Eva and Mollah, Sabur and Rotter, Patrik, Do Dividends Signal Future Earnings in the Nordic Stock Markets? (November 21, 2012). Review of Quantitative Finance and Accounting, 2015, 44(3), 493-511.. Available at SSRN: https://ssrn.com/abstract=2178925 or http://dx.doi.org/10.2139/ssrn.2178925

Eva Liljeblom

Swedish School of Economics and Business Administration ( email )

P.O. Box 479
FI-00101 Helsinki, 00101
Finland
+358-9-431 33 291 (Phone)
+358-9-431 33 393 (Fax)

Sabur Mollah (Contact Author)

Sheffield University Management School, University of Sheffield ( email )

Conduit Road
Sheffield, Sheffield S10 1FL
United Kingdom

Swansea Management School, Swansea University ( email )

Singleton Park
Swansea, Wales SA2 8PP
United Kingdom

Hull University Business School ( email )

Cottingham Road
Hull, Great Britain HU6 7RX
United Kingdom

Hull University Business School ( email )

Cottingham Road
Hull, Hull HU6 7RX
United Kingdom

Patrik Rotter

FE Education First ( email )

Sweden

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