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

See all articles by Dr.Hossein Parsian

Dr.Hossein Parsian

Plan and Budget organization of Iran

Amir Shams Koloukhi

Islamic Azad University - Young Researchers and Elites Club

Saeed Abdolnejad

University of Economic Sciences (Iran)

Date Written: August 1, 2013

Abstract

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

Suggested Citation

Parsian, Hossein and Shams Koloukhi, Amir and Abdolnejad, Saeed, The Relationship between Dividend Payouts Ratio and Future Earnings Growth, A Case of Listed Company in Iran Market (August 1, 2013). Interdisciplinary Journal of Contemporary Research in Business, Vol. 5, No. 4, August 2013, Available at SSRN: https://ssrn.com/abstract=2464051

Hossein Parsian (Contact Author)

Plan and Budget organization of Iran ( email )

Tehran, Tehran
Iran

Amir Shams Koloukhi

Islamic Azad University - Young Researchers and Elites Club ( email )

Torbat-e-Jam Branch
Torbat-e-Jam
Iran

Saeed Abdolnejad

University of Economic Sciences (Iran)

No. 242 Somayeh St
Tehran
Iran

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