Dividend persistence and earnings management in emerging markets
Autor(a) principal: | |
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Data de Publicação: | 2021 |
Outros Autores: | , |
Tipo de documento: | Artigo |
Idioma: | eng por |
Título da fonte: | Revista Contabilidade & Finanças (Online) |
Texto Completo: | https://www.revistas.usp.br/rcf/article/view/193094 |
Resumo: | We investigate the relationship between dividend persistence and earnings management, considering the levels of economic performance and risk in emerging countries. Earnings are important for valuation models and dividends have evidence that suggests greater persistence, however, there is no evidence on the effect of earnings management on dividend persistence in emerging countries. Despite the substantial growth of emerging markets in the last decades, the degree of informational efficiency and the legal protection for investors is inferior to developed countries, and this is a potential risk for investors who prefer to receive dividends as a way of avoiding expropriation by managers who can manage the firms’ earnings. We show that the reduction in macroeconomic volatility and the uncertainties concerning a country’s performance and risk improve dividend persistence. Thus, even in the face of earnings manipulations, dividends are better inputs for valuation models. Using the persistence models of Dechow and Schrand (2004) and Lintner (1956), we interact the dividend persistence with firms’ earnings management and some indicators of a country’s economic performance and risk for 7,536 publicly traded firms from 20 countries, included in the Morgan Stanley Capital International (MSCI) Emerging Markets Index from 2000 to 2016. We find that in emerging countries dividends are more persistent than earnings. If a company pays United States dollars (USD) 1.00 in dividends, then, on average, US$ 0.89 will persist into next year’s dividends (for earnings, only US$ 0.76 persists). We find that, in addition to the past dividends and current earnings presented by Lintner (1956), current dividends are a function of earnings management volume because this event reduces dividend persistence. |
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Dividend persistence and earnings management in emerging marketsPersistência dos dividendos e gerenciamento de resultados em mercados emergentesPersistência de lucrosPagamento de dividendosAccruals discricionáriosEarnings persistenceDividend payoutDiscretionary accrualsWe investigate the relationship between dividend persistence and earnings management, considering the levels of economic performance and risk in emerging countries. Earnings are important for valuation models and dividends have evidence that suggests greater persistence, however, there is no evidence on the effect of earnings management on dividend persistence in emerging countries. Despite the substantial growth of emerging markets in the last decades, the degree of informational efficiency and the legal protection for investors is inferior to developed countries, and this is a potential risk for investors who prefer to receive dividends as a way of avoiding expropriation by managers who can manage the firms’ earnings. We show that the reduction in macroeconomic volatility and the uncertainties concerning a country’s performance and risk improve dividend persistence. Thus, even in the face of earnings manipulations, dividends are better inputs for valuation models. Using the persistence models of Dechow and Schrand (2004) and Lintner (1956), we interact the dividend persistence with firms’ earnings management and some indicators of a country’s economic performance and risk for 7,536 publicly traded firms from 20 countries, included in the Morgan Stanley Capital International (MSCI) Emerging Markets Index from 2000 to 2016. We find that in emerging countries dividends are more persistent than earnings. If a company pays United States dollars (USD) 1.00 in dividends, then, on average, US$ 0.89 will persist into next year’s dividends (for earnings, only US$ 0.76 persists). We find that, in addition to the past dividends and current earnings presented by Lintner (1956), current dividends are a function of earnings management volume because this event reduces dividend persistence. Investigamos a relação entre persistência dos dividendos e gerenciamento de resultados, considerando os níveis de desempenho econômico e de risco em países emergentes. Os resultados [lucros] são importantes para os modelos de avaliação de empresas e os dividendos apresentam evidências que sugerem maior persistência; entretanto, não há evidências sobre o efeito do gerenciamento de resultados sobre a persistência dos dividendos em países emergentes. Apesar do crescimento expressivo dos mercados emergentes nas últimas décadas, os graus de eficiência informacional e de proteção legal aos investidores são inferiores aos dos países desenvolvidos, e esses são riscos potenciais para os investidores que preferem receber dividendos como forma de evitar a expropriação por gestores que podem gerenciar os resultados das empresas. Nós mostramos que a redução da volatilidade macroeconômica e das incertezas quanto ao desempenho e risco de um país melhoram a persistência dos dividendos. Assim, mesmo em face das manipulações de resultados, os dividendos são melhores dados de entrada [inputs] para os modelos de valuation. Usando os modelos de persistência de Dechow e Schrand (2004) e Lintner (1956), interagimos a persistência dos dividendos com o gerenciamento de resultados das empresas e com alguns indicadores de desempenho econômico e de risco dos países, para 7.536 empresas de capital aberto em 20 países, incluídas no Índice de Mercados Emergentes Morgan Stanley Capital International (MSCI) entre 2000 e 2016. Descobrimos que, nos países emergentes, os dividendos são mais persistentes do que os lucros. Se uma empresa paga 1,00 dólar americano (USD) em dividendos, então, em média, US$ 0,89 persistirão nos dividendos do próximo ano (para lucros, persistem apenas US$ 0,76). Descobrimos que, além dos dividendos anteriores e dos lucros correntes apresentados por Lintner (1956), os dividendos correntes são uma função do volume de gerenciamento de resultados porque esse evento reduz a persistência dos dividendos. Universidade de São Paulo. Faculdade de Economia, Administração, Contabilidade e Atuária2021-12-07info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersionapplication/pdfapplication/pdftext/xmlhttps://www.revistas.usp.br/rcf/article/view/19309410.1590/1808-057x202113040Revista Contabilidade & Finanças; v. 33 n. 88 (2022); 130-149Revista Contabilidade & Finanças; Vol. 33 No. 88 (2022); 130-149Revista Contabilidade & Finanças; Vol. 33 Núm. 88 (2022); 130-1491808-057X1519-7077reponame:Revista Contabilidade & Finanças (Online)instname:Universidade de São Paulo (USP)instacron:USPengporhttps://www.revistas.usp.br/rcf/article/view/193094/177897https://www.revistas.usp.br/rcf/article/view/193094/177896https://www.revistas.usp.br/rcf/article/view/193094/177898Copyright (c) 2021 Revista Contabilidade & Finançashttp://creativecommons.org/licenses/by/4.0info:eu-repo/semantics/openAccessMartins, Orleans SilvaSousa, Raíssa Aglé Moura deGirão, Luiz Felipe de Araújo Pontes2022-10-06T18:10:21Zoai:revistas.usp.br:article/193094Revistahttp://www.revistas.usp.br/rcf/indexPUBhttps://old.scielo.br/oai/scielo-oai.phprecont@usp.br||recont@usp.br1808-057X1519-7077opendoar:2022-10-06T18:10:21Revista Contabilidade & Finanças (Online) - Universidade de São Paulo (USP)false |
dc.title.none.fl_str_mv |
Dividend persistence and earnings management in emerging markets Persistência dos dividendos e gerenciamento de resultados em mercados emergentes |
title |
Dividend persistence and earnings management in emerging markets |
spellingShingle |
Dividend persistence and earnings management in emerging markets Martins, Orleans Silva Persistência de lucros Pagamento de dividendos Accruals discricionários Earnings persistence Dividend payout Discretionary accruals |
title_short |
Dividend persistence and earnings management in emerging markets |
title_full |
Dividend persistence and earnings management in emerging markets |
title_fullStr |
Dividend persistence and earnings management in emerging markets |
title_full_unstemmed |
Dividend persistence and earnings management in emerging markets |
title_sort |
Dividend persistence and earnings management in emerging markets |
author |
Martins, Orleans Silva |
author_facet |
Martins, Orleans Silva Sousa, Raíssa Aglé Moura de Girão, Luiz Felipe de Araújo Pontes |
author_role |
author |
author2 |
Sousa, Raíssa Aglé Moura de Girão, Luiz Felipe de Araújo Pontes |
author2_role |
author author |
dc.contributor.author.fl_str_mv |
Martins, Orleans Silva Sousa, Raíssa Aglé Moura de Girão, Luiz Felipe de Araújo Pontes |
dc.subject.por.fl_str_mv |
Persistência de lucros Pagamento de dividendos Accruals discricionários Earnings persistence Dividend payout Discretionary accruals |
topic |
Persistência de lucros Pagamento de dividendos Accruals discricionários Earnings persistence Dividend payout Discretionary accruals |
description |
We investigate the relationship between dividend persistence and earnings management, considering the levels of economic performance and risk in emerging countries. Earnings are important for valuation models and dividends have evidence that suggests greater persistence, however, there is no evidence on the effect of earnings management on dividend persistence in emerging countries. Despite the substantial growth of emerging markets in the last decades, the degree of informational efficiency and the legal protection for investors is inferior to developed countries, and this is a potential risk for investors who prefer to receive dividends as a way of avoiding expropriation by managers who can manage the firms’ earnings. We show that the reduction in macroeconomic volatility and the uncertainties concerning a country’s performance and risk improve dividend persistence. Thus, even in the face of earnings manipulations, dividends are better inputs for valuation models. Using the persistence models of Dechow and Schrand (2004) and Lintner (1956), we interact the dividend persistence with firms’ earnings management and some indicators of a country’s economic performance and risk for 7,536 publicly traded firms from 20 countries, included in the Morgan Stanley Capital International (MSCI) Emerging Markets Index from 2000 to 2016. We find that in emerging countries dividends are more persistent than earnings. If a company pays United States dollars (USD) 1.00 in dividends, then, on average, US$ 0.89 will persist into next year’s dividends (for earnings, only US$ 0.76 persists). We find that, in addition to the past dividends and current earnings presented by Lintner (1956), current dividends are a function of earnings management volume because this event reduces dividend persistence. |
publishDate |
2021 |
dc.date.none.fl_str_mv |
2021-12-07 |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article info:eu-repo/semantics/publishedVersion |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
https://www.revistas.usp.br/rcf/article/view/193094 10.1590/1808-057x202113040 |
url |
https://www.revistas.usp.br/rcf/article/view/193094 |
identifier_str_mv |
10.1590/1808-057x202113040 |
dc.language.iso.fl_str_mv |
eng por |
language |
eng por |
dc.relation.none.fl_str_mv |
https://www.revistas.usp.br/rcf/article/view/193094/177897 https://www.revistas.usp.br/rcf/article/view/193094/177896 https://www.revistas.usp.br/rcf/article/view/193094/177898 |
dc.rights.driver.fl_str_mv |
Copyright (c) 2021 Revista Contabilidade & Finanças http://creativecommons.org/licenses/by/4.0 info:eu-repo/semantics/openAccess |
rights_invalid_str_mv |
Copyright (c) 2021 Revista Contabilidade & Finanças http://creativecommons.org/licenses/by/4.0 |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf application/pdf text/xml |
dc.publisher.none.fl_str_mv |
Universidade de São Paulo. Faculdade de Economia, Administração, Contabilidade e Atuária |
publisher.none.fl_str_mv |
Universidade de São Paulo. Faculdade de Economia, Administração, Contabilidade e Atuária |
dc.source.none.fl_str_mv |
Revista Contabilidade & Finanças; v. 33 n. 88 (2022); 130-149 Revista Contabilidade & Finanças; Vol. 33 No. 88 (2022); 130-149 Revista Contabilidade & Finanças; Vol. 33 Núm. 88 (2022); 130-149 1808-057X 1519-7077 reponame:Revista Contabilidade & Finanças (Online) instname:Universidade de São Paulo (USP) instacron:USP |
instname_str |
Universidade de São Paulo (USP) |
instacron_str |
USP |
institution |
USP |
reponame_str |
Revista Contabilidade & Finanças (Online) |
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Revista Contabilidade & Finanças (Online) |
repository.name.fl_str_mv |
Revista Contabilidade & Finanças (Online) - Universidade de São Paulo (USP) |
repository.mail.fl_str_mv |
recont@usp.br||recont@usp.br |
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1787713777912774656 |