Are dividends associated with the quality of earnings?

Yen H. Tong, Bin Miao

Research output: Journal article publicationJournal articleAcademic researchpeer-review

21 Citations (Scopus)

Abstract

We examine whether dividend paying status is associated with the quality of earnings. We find dividend paying status is associated with (1) lower absolute values of discretionary accruals; (2) lower standard deviation and absolute magnitude of the errors associated with the mapping of accruals into cash flows; and (3) more value relevant earnings. We also find evidence that the positive association between dividend paying status and earnings quality is stronger (weaker) when the size of dividend payouts is larger (smaller). Overall, our results suggest dividend paying status is indicative of firms' earnings quality.
Original languageEnglish
Pages (from-to)183-205
Number of pages23
JournalAccounting Horizons
Volume25
Issue number1
DOIs
Publication statusPublished - 1 Mar 2011
Externally publishedYes

ASJC Scopus subject areas

  • Accounting

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