An investigation into the financial characteristics of dividend initiating firms

Dividend announcements are said to have an informational content concerning the value of the firm. Most studies on dividend announcements have involved models to predict change or to analyze that informational content. The purpose of this study is to establish the financial characteristics of firms that initiate or significantly increase dividends. One hundred firms were selected for study. Fifty of the firms had recently either initiated or significantly increased dividends; the other fifty were selected at random. Significant differences were found in the financial characteristics of the two groups. The results were generally consistent with previous studies and finance theory. There were however, two genuine surprises. The dividend initiating firms possessed lower levels of liquidity and activity than firms selected at random. This suggests that dividends may not be paid to dispose of excess cash, but to provide shareholders with some tangible reward in periods of low liquidity and little activity.     

AN EXAMINATION OF THE FEASIBILITY OF USING MONETARY DATA FOR NATIONAL INCOME ESTIMATES

In a number of underdeveloped countries today, adequate statistics for estimating national output by traditional national accounting methods are unavailable or unreliable. However, many of these same countries do publish data on monetary variables at an early stage in their development. These data can now be used to estimate national income.
In this study the money supply was defined to include all currency in circulation, private deposits subject to check at all banks and postal systems, all government deposits, and unused overdrafts less float. The national accounts data were taken from United Nations sources and data supplied by various foreign statistical offices. To make the accounts more comparable in terms of coverage and to limit reported income to the monetized sector of the economy, non-monetary imputations were deleted.
The monetary and national accounts data were combined in a multiple, stepwise regression. National income was used as the dependent variable and money supply and other data were used as the independent variables. The final estimating equations explained about 96 per cent of the variation in income between countries. Other tests were conducted using the currency ratio, transactions velocity, population, and per capita consumption. However, these variables did not augment the explanatory power of the regression equations.
When the equations were used to estimate national income for twenty-two under-developed countries, the derived estimates showed a high degree of concordance with reported income where it existed for comparative purposes. The results indicate that monetary data can be used to estimate national income for underdeveloped countries with a relatively high degree of accuracy, between countries, and from year to year within a country.