The dynamics of dividends,earnings and prices: evidence and implications for dividend smoothing and signaling

This paper examines the dynamic relations among corporate dividends, earnings and prices, and the implications of these relations for dividend signaling and smoothing. A multiple hypotheses testing method is employed to identify causal relations among the three financial variables and to test the empirical implications of dividend smoothing and signaling models. The results show that dynamic relations exist among dividends, earnings and prices. Empirical evidence is consistent with the contention that dividend changes are often driven by both signaling and smoothing motives. Additional tests are developed to differentiate between the dividend signaling and smoothing models. These tests impose restrictions on the dynamics of the financial variables and information signaling. It is found that dividend changes frequently provide information about unexpected changes in future earnings for a little more than a year.     

A test of the Ohlson (1995) model: Empirical evidence from Japan

This paper investigates the validity of the Ohlson [Contemp. Account. Res. 11 (1995) 661] information dynamics (Linear Information Model: LIM) and attempts to improve the LIM. The difficulty concerning the empirical tests of the LIM lies in identifying ν_t, which denotes information other than abnormal earnings. Recent papers, such as those of Myers [Account. Rev. 74 (1999) 1], Hand and Landsman [The pricing of dividends in equity valuation. Working paper, University of North Carolina, 1999], and Barth et al. [Accruals, cash flows, and equity values. Working paper (January) (July), Stanford University, 1999], all try to specify ν_t by using various accounting information. Instead of tackling this difficult task, this paper focuses on serial correlation in the error terms caused by omitting the necessary variable ν_t from the regression equation. The results indicate that adjustment for serial correlation leads to an improvement of the LIM.     

Optimal dividend policy,debt policy and the level of investment within a multi-period DCF framework

This paper simultaneously analyses optimal dividend, debt and investment policy within a conventional multi-period DCF framework, and takes account of differential personal taxation over both investors and types of income, the effect of dividends and interest on the level of share issues and hence share issue costs, and the effect of dividends and interest on the level of internally-financed investment. Application of the model to three distinct tax regimes reveals that the value benefit from debt is small at best whilst the value benefit from dividends is substantial even in a regime without dividend imputation.     

From dividend yield to discounted cash flow: a history of UK and US equity valuation techniques

This article explores how, as capital markets developed, equity valuation methods changed. The history of equity valuation is described, from its early origins during the South Sea Bubble, through the new issue boom of the nineteenth century and the stock market booms of the 1920s and 1950s. The moves from dividend yield and asset backing, to earnings yield and then P/E ratios are chronicled. The article compares developments in the UK and the US, in particular the relative slowness of the UK market to adopt US-pioneered techniques such as the P/E ratio, the concept of value versus growth stocks, and using intrinsic value to determine whether shares are cheap or dear. The article concludes with a discussion of the relatively slow introduction of the dividend discount model and of discounted cash flow as equity valuation tools on both sides of the Atlantic.     

Relative accuracy and predictive ability of direct valuation methods, price to aggregate earnings method and a hybrid approach

In this paper, we assess the relative performance of the direct valuation method and industry multiplier models using 41 435 firm‐quarter Value Line observations over an 11 year (1990–2000) period. Results from both pricing‐error and return‐prediction analyses indicate that direct valuation yields lower percentage pricing errors and greater return prediction ability than the forward price to aggregated forecasted earnings multiplier model. However, a simple hybrid combination of these two methods leads to more accurate intrinsic value estimates, compared to either method used in isolation. It would appear that fundamental analysis could benefit from using one approach as a check on the other.     

城市品牌资产的开发、评估及维护

城市品牌资产的评估及维护是城市品牌理论的重要内容。本文从城市品牌资产的界定和顾客资产导向下的城市品牌核心价值开发入手,推导出城市品牌资产维护的重要性,并指出应该从政府、行业协会及企业三个层面对城市品牌资产进行维护。希望能对城市品牌资产的开发、评估和维护等方面的研究有所启发。     

Binomial basis for linear information dynamics: real options, dividends and the valuation of equity

Analytical research has confirmed that real options give rise to the kind of nonlinearities observed in practice between equity prices and the figures appearing on corporate financial statements. We develop these real option values in terms of a quasi 'supply-side' model of linear information dynamics based on simple discrete time binomial filtration processes. Our analysis shows that the linear models that pervade the empirical (and analytical) work of the area, will almost certainly suffer from an omitted variables problem. Parameter estimation will then be inconsistent and inefficient.     

Information content of earnings announcements in the New Zealand equity market,a longitudinal analysis

We compute abnormal return variance and abnormal trading volume in the 3‐day window surrounding earnings announcements to examine the information content of earnings announcements in the New Zealand equity market over the past 16 years. We find that the information content of earnings announcements has increased significantly over time, and this finding holds true for both interim and preliminary earnings announcements. We find evidence that earnings announcements with June year‐ends exhibit a higher level of information content and experience a more pronounced rising trend as compared to earnings announcements with non‐June year‐ends. Several firm characteristics appear to relate to the level of the information content of earnings announcements as well as to compound the trend over time. We document an important finding that the information content of earnings announcements increases remarkably in the period after the adoption of the International Financial Reporting Standards (IFRS).     

Real (adaptation) options and the valuation of equity: some empirical evidence

Data from 1,374 firms across four broad industrial groupings are used to assess the contribution that real (adaptation) options make to overall equity values. The analysis indicates that real (adaptation) options make a significant contribution to the equity value of firms with a market to book ratio (of equity) of around unity or less. As the market to book ratio grows beyond this level, however, the contribution made by real (adaptation) options decays quickly away and equity values are mainly comprised of the present value of the dividends that firms are expected to pay. This means that for around one in every five of the firms in our sample real (adaptation) options make a significant contribution to overall equity value. Thus, while linear equity valuation models would seem to be appropriate for the substantial majority of firms on which our sample is based, there is a sizeable minority of firms where real (adaptation) options have a significant impact on equity values. For this latter group of firms there will be a non-linear relationship between equity value and its determining variables. This has important implications for the regression procedures that are applied in this area of accounting research.     

Key performance indicators as supplements to earnings: Incremental informativeness,demand factors,measurement issues,and properties of their forecasts

The documented decline in the information content of earnings numbers has paralleled the emergence of disclosures, mostly voluntary, of industry-specific key performance indicators (KPIs). We find that the incremental information content conveyed by KPI news is significant for many KPIs yet diminished when details about the computation of the KPI are absent or when the computation changes over time. Consistent with analysts responding to investor information demand, we find that analysts are more likely to produce forecasts for a KPI when that KPI has more information content and when earnings are less informative. We also analyze the properties of analysts’ KPI forecasts and find that KPI forecasts are more accurate than mechanical forecasts and their accuracy exceeds that of earnings forecasts. Our study contributes to the literature on the information content of KPIs as well as research on the properties of analysts’ forecasts. We provide evidence on whether and how to regulate voluntary disclosures.

     

Accounting information and the valuation of Seasoned Equity Offerings (SEOs)

This study investigates the association between publicly available information disclosed in the SEO prospectus and offer prices of SEOs, as well as the association between this type of publicly available information and stock returns subsequent to an SEO after controlling for self-selection bias. The empirical evidence shows that disclosure of the planned uses of the SEO proceeds reveals value-relevant information which has been incorporated by the underwriters in setting the offer prices. Control for self-selection bias appears necessary to obtain unbiased estimates in the regression model explaining the determinants of offer price in SEOs.     

Supplement to the Economic Bulletin No 9, September 1995 (data as of 7th September 1995)

Supplement to the Economic Bulletin No 9, September 1995 (data as of 7th September 1995)     

Supplement to the Economic Bulletin No 10, October 1995 (data as of 5th October 1995)

Supplement to the Economic Bulletin No 10, October 1995 (data as of 5th October 1995)     

Supplement to the Economic Bulletin No 2, February 1995 (data as of 3rd February 1995)

Supplement to the Economic Bulletin No 2, February 1995 (data as of 3rd February 1995)     

Supplement to the Economic Bulletin No 11, November 1995 (data as of 9th November 1995)

Supplement to the Economic Bulletin No 11, November 1995 (data as of 9th November 1995)     

Supplement to the Economic Bulletin No 8, August 1995 (data as of 3rd August 1995)

Supplement to the Economic Bulletin No 8, August 1995 (data as of 3rd August 1995)     

Supplement to the Economic Bulletin No 7, July 1995 (data as of 6th Junly 1995)

Supplement to the Economic Bulletin No 7, July 1995 (data as of 6th Junly 1995)     

Supplement to the Economic Bulletin No 3, March 1995 (data as of 9th March 1995)

Supplement to the Economic Bulletin No 3, March 1995 (data as of 9th March 1995)