The study of the effect of dividend earnings on the quality of earnings with emphasis on the industry type

Abstract

The purpose of this study was to investigate the effect of dividend earnings on the quality of earnings with emphasis on the type of industry. In this study, earnings quality have been analyzed in four dimensions including net value of discretionary accruals, accruals quality (quality of financial reporting), income smoothing and association of earnings to the stock value. Also, two models of Eckel and TZ were used for separation of smoothers from non-smoothers companies. The present study has applied aim and in terms of methodology refers to scientific-correlation research type. The statistical population of this study were the accepted companies in Tehran Stock Exchange in 5 industries including food, automotive, chemical, pharmaceutical and cement that 100 companies have been located in statistical sample of study by systematic elimination sampling method. The time period of study was among 2005 to 2011 but the data of year 2004 were also used to calculate some research variables. In this study, the ordinary least squares regression and also specific regression of each company were used in time series and annual cross-sectional to calculate the some of the research variables. Multiple regression and logistic regression were used to test the hypotheses of this study. The research results indicated that dividend earnings had positive impact on the net value of discretionary accruals and income smoothing in both models (TZ and Eckel) and a significant inverse impact on accruals quality (quality of financial reporting). Also, no significant relation was observed between dividend earnings and association of earnings to the stock value.