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Stale and scale effects in markets-based accounting research

  • This study revisits prior research on the valuation of dividends in an accounting-based valuation framework. Using a battery of tests, we show that market value deflation is essential in market-based tests of dividend displacement and signaling because it controls for ‘stale’ information in addition to scale (size) differences across firms. For U.S. firms, we show that after controlling for ‘stale’ information, the empirical association between dividends and market values switches from positive to negative. This switch is not explained by scale differences across firms. Further, we show that after controlling for staleness, the valuation of dividends remains positive for European firms. This result is explained by the relatively stronger association of dividends with future earnings in these settings (i.e., signaling). Lastly, our country-specific estimates of dividend valuation provide a potentially valuable index for studies aimed at examining the effects of accounting and securities regulation on information asymmetries in an international context.

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Metadaten
Author:Igor Goncharov, David Veeman
URN:urn:nbn:de:hbz:992-opus4-6783
DOI:https://doi.org/10.2139/ssrn.1072804
DOI:https://doi.org/10.1080/09638180.2013.795870
Subtitle (English):evidence from the valuation of dividends
Series (Serial Number):FAccT Center Working Paper Series (04/2012)
Publisher:WHU - Otto Beisheim School of Management
Place of publication:Vallendar
Document Type:Working Paper
Language:English
Date of Publication (online):2012/03/09
Date of first Publication:2012/03/09
Release Date:2018/06/19
Edition:February 2013
Page Number:63
Note:
Published in: European Accounting Review 23(2014)1, pp. 23-55
Institutes:WHU Centers / WHU Financial Accounting & Tax Center (FAccT Center)
JEL-Classification:C Mathematical and Quantitative Methods / C1 Econometric and Statistical Methods: General / C10 General
G Financial Economics / G1 General Financial Markets / G12 Asset Pricing; Trading volume; Bond Interest Rates
G Financial Economics / G1 General Financial Markets / G14 Information and Market Efficiency; Event Studies
M Business Administration and Business Economics; Marketing; Accounting / M4 Accounting and Auditing / M41 Accounting
Licence (German):Copyright for this publication