The Impact Of Previous Good And Bad News Of The Company On The Cash Dividend Smoothing

The cash dividend smoothing is one of the classic problems in the field of dividend distribution,which has attracted the attention of many scholars at home and abroad.Scholars analyze the aspects of principal-agent,signal transmission,industry competition,and catering theory,and explore the economic "consequences" of dividend smoothing.However,most of these studies explore from the perspective of investors or constrained managers,and there is a lack of analysis of managers' smooth cash dividend policy drivers.The importance of information is undoubted,and scholars are involved in the quality of information disclosure,information disclosure time,information valence,information asymmetry.Although some scholars study the motivation of managers to formulate a stable dividend policy from the perspective of information asymmetry,they also divide the early information into "good news" and "bad news" according to their valence.The field conducts research,but the impact of information valence and the timeliness of information on the cash dividend smoothing has not reached an agreement.Whether the company's previous information will affect the manager's cash dividend decision is the focus of this paper.This paper will study the increase or decrease of earnings per share after deducting non-recurring gains and losses as the proxy indicator of the company's "good and bad" news.Using the data of China's listed companies from 2002 to 2015,using the methods in Leary and Michaely(2011)to eliminate data that does not meet the demand,and using the speed adjustment coefficient of cash dividends to measure the cash dividend smoothing of each company.Using the annual data,we studied the impact of "good news" and "bad news" on the cash dividend smoothing,and used quarterly data to examine the impact of previous different valence information on the cash dividend smoothing.By studying the impact of the company's early "good and bad" news on the cash dividend smoothing,the relationship between the manager's cash dividend policy and the previously disclosed performance information will be analyzed.According to the research of this paper,the previous "good and bad" news of the company in the early stage can predict the trend of the cash dividend smoothing,with the company's performance information to the "good and bad" two extreme changes,it shows a significantly increasing trend indicates that on the company's dividend smoothing.That is to say,no matter which valence of the information the manager also has the extreme need to carry out dividend smoothing.Relative to the "bad news",the same degree of "good news" has a greater impact on cash dividend smoothing,indicating that in the case of "good news",the company's willingness to maintain the cash dividend smoothing is stronger.Further comparison of the company's quarterly information reveals that the impact of “bad news” on the smoothness of cash dividends has a seasonally decreasing effect;the "good and bad" information in the first quarter has more impact on the smoothness of cash dividends than in other quarters.It shows a first-cause effect in the manager's serial memory,which indicates they always pay more attention at the manager's to the initial annual information when the dividend policy is formulated.For the research results,this paper interprets the phenomenon that managers pay attention to information released at the beginning of the year from the perspective of relationship maintenance,interest compensation and apply to the memory law,and also provides the investors with relevant investment advice as well.