Dividend Changes and the Persistence of Past Earnings Changes, Empirical Evidence from the Athens Stock Exchange

There will be examined whether the market interprets changes in dividends as a signal about the persistence of past earnings changes. Prior to observing the signal of this change, investors may believe that previous earnings variations are not necessarily indicative of future earnings levels. There will be investigated whether a change in dividends modifies investors' assessments about the valuation implications of past earnings. Results confirm the hypothesis that changes in dividends cause investors to revise their expectations about the persistence of past earnings changes. This effect varies predictably with the magnitude of the dividend change and the sign of the past earnings change