The Role of Earnings Quality in Adopting a Persistent Dividend Policy: The System Generalized Method of Moments

Aflatooni, Abbas; Nikbakht, Zahra

doi:10.22054/qjma.2020.38991.1943

Document Type : Research Paper

Authors

Abbas Aflatooni ¹
Zahra Nikbakht ²

¹ Assistant professoe , Accounting Department, Bu-Ali sina university, Hamadan.Iran

² َAssistant Professor,Department of Accounting, Payame Noor University, ,,Tehran,IRAN

https://doi.org/10.22054/qjma.2020.38991.1943

Abstract

One of the firms’ tools to provide a low-risk image is adopting a persistent dividend policy. However, it should be noted that due to financial constraints, many firms are unable to implement this policy in the long run. This research investigates the role of earnings quality in adopting a persistent dividend policy in 148 firms listed in Tehran Stock Exchange (TSE) (includes 1628 observations) during 2007-2017. To measure earnings quality, I use five proxies and to investigate their role in adopting a persistent dividend policy, I employ partial adjustment model and dividends adjustment speed concept. To estimate the models, I apply the Generalized Method of Moments (GMM) with system estimator. The research results show that compared with other firms, firms with lower total accruals, lower discretionary accruals, higher accruals quality, smoother earnings and higher overall earnings quality, are more able to conduct a persistent dividends policy. The research results using differenced-GMM estimator confirm the research primary results. These findings are consistent with the predictions of the signaling theory

Keywords

References

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Empirical Studies in Financial Accounting

The Role of Earnings Quality in Adopting a Persistent Dividend Policy: The System Generalized Method of Moments

References

References

Volume 17, Issue 67
October 2020
Pages 153-175

The Role of Earnings Quality in Adopting a Persistent Dividend Policy: The System Generalized Method of Moments

References

References

Volume 17, Issue 67October 2020Pages 153-175

Volume 17, Issue 67
October 2020
Pages 153-175