Do firms manage earnings to meet dividend thresholds
Dividend-paying firms tend to manage earnings upward when their earnings would otherwise fall short of expected dividend levels. This behavior is evident only in firms with positive debt and is more aggressive prior to the Sarbanes-Oxley Act, subsequent to the 2003 dividend tax cut, in high-payout firms, in firms whose CEOs receive higher dollar dividends and have higher pay-performance sensitivities, and in firms that raise less outside equity. Moreover, this earnings management behavior appears to significantly impact the likelihood of a dividend cut. Our findings imply that managers treat expected dividend levels as an important earnings threshold.
Year of publication: |
2008
|
---|---|
Authors: | Daniel, Naveen D. ; Denis, David J. ; Naveen, Lalitha |
Published in: |
Journal of Accounting and Economics. - Elsevier, ISSN 0165-4101. - Vol. 45.2008, 1, p. 2-26
|
Publisher: |
Elsevier |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Do firms manage earnings to meet dividend thresholds?
Daniel, Naveen D., (2008)
-
Do Firms Manage Earnings to Meet Dividend Thresholds?
Daniel, Naveen D., (2014)
-
Do Firms Manage Earnings to Meet Dividend Thresholds?
Daniel, Naveen D., (2014)
- More ...