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The Predictive Content of Earnings Forecasts and Dividends
Author(s) -
PENMAN STEPHEN H.
Publication year - 1983
Publication title -
the journal of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 18.151
H-Index - 299
eISSN - 1540-6261
pISSN - 0022-1082
DOI - 10.1111/j.1540-6261.1983.tb02290.x
Subject(s) - earnings , dividend , stock (firearms) , predictive value , econometrics , economics , value (mathematics) , investment (military) , dividend payout ratio , dividend policy , business , financial economics , finance , statistics , mathematics , mechanical engineering , medicine , politics , political science , law , engineering
This paper compares the properties of dividend announcements and management earnings forecasts as predictors of earnings and firm value. First, the two predictors are compared on the basis of their ability to predict earnings. Then the information they convey about firm value is assessed by comparison of the performance of investment strategies based on values of the two predictors. Finally, the effects of dividend announcements on stock prices are considered.