Dividend Changes and Future Earnings Performance

An important issue that has been considered in signaling hypothesis is positive relationship between dividend changes and future earnings changes and future profitability of the business unit that is addressed in the present study. For this, linear and nonlinear regression models were used. The studied period is from 2001 until 2012. The results show that dividend changes are not very informative about future earnings changes and future profitability of the business unit has a negative relationship with dividend changes, but this relationship was not statistically significant.