Earnings and dividend informativeness when cash flow rights are separated from voting rights

Jennifer Francis*, Katherine Schipper, Linda Vincent

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

159 Scopus citations

Abstract

We contrast the informativeness of earnings and dividends for firms with dual class and single class ownership structures. Results of both across-sample tests (which explicitly control for factors influencing ownership structure and informativeness) and within-sample tests (which implicitly control for factors associated with ownership structure) show that earnings are generally less informative, and dividends are at least as (if not more) informative, for dual class firms. We interpret these results as suggesting that the net effect of dual class structures is to reduce the credibility of earnings and to enhance the salience of dividends as measures of performance.

Original languageEnglish (US)
Pages (from-to)329-360
Number of pages32
JournalJournal of Accounting and Economics
Volume39
Issue number2
DOIs
StatePublished - Jun 1 2005

Keywords

  • Dividends
  • Dual class
  • Earnings

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

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