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Do Dividend Changes in South Africa Signal Earnings Changes?

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  • J Wolff
  • C J Auret

Abstract

Dividend theory suggests that changes in dividends convey information content about the future earnings of the firm. We examine such a relationship using South African data and find virtually no support for it. It is found using categorical analysis that the size of the dividend increase has a strong positive relationship with current earnings, but fails to predict future earnings with any consistency. Regression analysis shows the presence of a strong relationship between current dividend and earnings changes, but no significant relationships are found between dividend changes and earnings changes one year and two years post dividend change.

Suggested Citation

  • J Wolff & C J Auret, 2009. "Do Dividend Changes in South Africa Signal Earnings Changes?," Studies in Economics and Econometrics, Taylor & Francis Journals, vol. 33(3), pages 19-38, December.
    • Handle: RePEc:taf:rseexx:v:33:y:2009:i:3:p:19-38
    DOI: 10.1080/10800379.2009.12106471
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