The Relationship between Dividend Payouts Ratio and Future Earnings Growth, A Case of Listed Company in Iran Market
Interdisciplinary Journal of Contemporary Research in Business, Vol. 5, No. 4, August 2013
7 Pages Posted: 10 Jul 2014
Date Written: August 1, 2013
Decision making about dividend payout is one of the most important decision that companies should encounter with. Companies' dividend payouts over the time and with a stable manner can effects on share price, future earnings growth and finally investor's evaluation about owners' equity. This study examines the use of the payout ratio as a predictor of a firm’s future earnings growth. OLS (ordinary least squares) employed for hypothesis test in multi variables regression method. We found out there is a positive relation between dividend payouts and future earnings growth by analyzing 102 companies over the 2004-2010 period. These findings are consistent with Arnott and Asness (2003) research results that document a positive relation between dividend payouts and future earnings growth.In other words, dividend payouts is one of the most important items in forecasting future earnings growth of companies listed in Tehran stock exchange.
Keywords: Forecasting (predicting), future profit growth, Tehran Exchange Stock
JEL Classification: G10, M00
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