Analyst Dividend Forecasts and Their Usefulness to Investors: International Evidence

54 Pages Posted: 21 Oct 2015 Last revised: 15 Sep 2021

See all articles by Pawel Bilinski

Pawel Bilinski

Bayes Business School, City University London

Mark T Bradshaw

Boston College

Date Written: October 21, 2015

Abstract

In contrast to the disappearing dividends view prevalent in the literature, we document extensive dividend payments by firms and significant variability within firms and across 16 countries during 2000–2013. We predict that within-firm variability in dividends increases investor demand for forward-looking dividend information, and analysts respond by producing informative dividend forecasts. We find that analyst dividend forecasts are available for most dividend-paying firms and are more prevalent for firms with higher variability of dividends. Analyst dividend forecasts are more accurate than alternative proxies based on extrapolations of past dividends. Finally, dividend forecasts (i) are incrementally useful to investors beyond information in other fundamentals such as earnings and cash flow forecasts, (ii) help investors interpret earnings quality, and (iii) are associated with investors’ portfolio allocation decisions.

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)

Bayes Business School, City University London ( 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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