Earnings and dividend informativeness when cash flow rights are separated from voting rights

Earnings and dividend informativeness when cash flow rights are separated from voting rights We contrast the informativeness of earnings and dividends for firms with dual class and single class ownership structures. Results of both across-sample tests (which explicitly control for factors influencing ownership structure and informativeness) and within-sample tests (which implicitly control for factors associated with ownership structure) show that earnings are generally less informative, and dividends are at least as (if not more) informative, for dual class firms. We interpret these results as suggesting that the net effect of dual class structures is to reduce the credibility of earnings and to enhance the salience of dividends as measures of performance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

Earnings and dividend informativeness when cash flow rights are separated from voting rights

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Publisher
Elsevier
Copyright
Copyright © 2005 Elsevier B.V.
ISSN
0165-4101
D.O.I.
10.1016/j.jacceco.2005.01.001
Publisher site
See Article on Publisher Site

Abstract

We contrast the informativeness of earnings and dividends for firms with dual class and single class ownership structures. Results of both across-sample tests (which explicitly control for factors influencing ownership structure and informativeness) and within-sample tests (which implicitly control for factors associated with ownership structure) show that earnings are generally less informative, and dividends are at least as (if not more) informative, for dual class firms. We interpret these results as suggesting that the net effect of dual class structures is to reduce the credibility of earnings and to enhance the salience of dividends as measures of performance.

Journal

Journal of Accounting and EconomicsElsevier

Published: Jun 1, 2005

References

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