| Cash dividend distribution, which is the core of corporate earnings distribution, hasa closely connection with companies’ earnings quality. Earnings persistence, which isone of important indexes of earnings quality, has been widely noticed by society.Studying the impact of cash dividend distribution on earnings persistence offers animportant reference for investors to invest in the long term. Also it can help supervisiondepartments to make actual supervision policies and promote capital market’development.Firstly, this paper reviews literatures of cash dividend distribution, earningspersistence and the impact of cash dividend distribution on earnings persistencecomprehensively. The impact of cash dividend distribution on earnings persistence isanalyzed theoretically. Then, moderate indexes of earnings are selected and an earningspersistence composite index is constructed through principal component analysis. Also,the effectiveness of the composite index is tested. Based on them, the panel data modelson the impact of cash dividend distribution on earnings persistence are constructed. Theimpact is tested from cash dividend status and cash dividend changes, moreover, theeffects brought by controlling shareholders are discussed.The empirical results show that, in general, the cash dividend distribution haspositive influence on earnings persistence. From the view of cash divdidend status,companies which paid cash dividend have higher earnings persistence, the more cashdividend distribution, the more persistent of the earnings. From the view of cashdividend changes, there are some positive effects of cash dividend increasing onearnings persistence but none with cash dividend reducing. In view of holding structures,for companies with absolutely holding controlling shareholders, the impact of cashdividend distribution is weaker with the increasing of cash dividends. There is nosignificant variance of the impact of cash dividend changes with various holdingstructures. |
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