Analyst Dividend Forecasts and Their Usefulness to Investors: International Evidence

58 Pages Posted: 21 Oct 2015 Last revised: 9 Nov 2016

See all articles by Pawel Bilinski

Pawel Bilinski

City University London - Sir John Cass Business School

Mark T Bradshaw

Boston College

Date Written: October 21, 2015

Abstract

In contrast to the disappearing dividends view, we predict that variability in dividend payments increases investor demand for dividend information and analysts respond to this demand by producing informative dividend forecasts. We examine dividend payers from 16 countries spanning 2000–2013 and find that only 25% of firms exhibit sticky dividends, while the majority either increase (54%) or decrease (21%) dividends. Dividend forecasts are available for 87.9% of all dividend-issuing firms and their availability increases with dividend variability. Dividend estimates are useful to investors because they (i) are more accurate and better aligned with market dividend expectations than other surrogates, (ii) convey incremental information beyond that contained in other fundamentals, and (iii) help investors interpret the persistence of earnings news.

Keywords: analyst dividend forecasts; dividend forecast accuracy; information content of dividend forecasts

JEL Classification: G15; G38; M40

Suggested Citation

Bilinski, Pawel and Bradshaw, Mark T, Analyst Dividend Forecasts and Their Usefulness to Investors: International Evidence (October 21, 2015). Available at SSRN: https://ssrn.com/abstract=2677094 or http://dx.doi.org/10.2139/ssrn.2677094

Pawel Bilinski (Contact Author)

City University London - Sir John Cass Business School ( email )

106 Bunhill Row
London, EC1Y 8TZ
United Kingdom

Mark T Bradshaw

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

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