Profitability of dividends in explaining stock returns in companies listed on the Tehran Stock Exchange

Dissertation for Master's Degree

Orientation: Accounting

Abstract:

Profit is one of the important items of financial statements that has different uses in different writings.

Usually, profit is considered as a basis for tax calculation, a factor for formulating dividend payment policy, guidance for investors and decision-making, and a factor for forecasting. One of the benefits The main benefit is to use it as a forecasting tool that helps people predict future economic events and profits. In fact, it has been proven that dividends resulting from past profits can be used to predict future profits. Also, according to the concept of accounting profit in Statement No. 1 of the Financial Accounting Standards Board, it is assumed that accounting profit is a good measure to evaluate the performance of a business unit and can be used to predict future cash flows. Other experts assume that dividends are considered relevant information in the decision making models of investors and lenders.  This research takes into consideration the information content of dividends to evaluate the efficiency of companies listed on the Tehran Stock Exchange between 1383-1387 and examines the relationship between dividends and its amount as independent variables and stock returns as dependent variables. First, the research variables have been identified and to analyze the information, from the data obtained from Rahavard Navin and Tadbir Pardaz software. Excel software has been used to calculate research variables. These data were analyzed by SPSS software to test the hypotheses with the help of descriptive and inferential statistics such as correlation analysis. The following results have been obtained from the research:

Results of the first main hypothesis: We came to the conclusion that there is a positive correlation coefficient between the two variables of future year profit and stock return in the Iranian capital market and its value is 0.353; this correlation coefficient is almost average and in fact the mentioned variables cannot act independently and according to the adjusted determination of the obtained coefficient whose value is 0.118, it shows that 11.8% of the changes in stock returns depend on the next year's profit, and the rest of it is related to the variables that are not considered in this research. The results of the second main hypothesis: we came to the conclusion that there is a positive correlation coefficient in companies that pay dividends, between the two variables of the next year's profit and stock returns in the Iranian capital market, and its value is 0.402; this correlation coefficient is relatively moderate, and in fact, the mentioned variables cannot act independently. and according to the coefficient of determination adjusted to 0.156, it shows that 15.6% of the changes in stock returns depend on the next year's profit and the rest of it is related to the variables that are not considered in this research. The results of the third main hypothesis: We came to the conclusion that there is a positive correlation coefficient in companies that pay more dividends between the two variables of the next year's profit and stock returns in the Iranian capital market, and the value It is 0.410. that this correlation coefficient is relatively moderate and in fact the mentioned variables cannot act independently and according to the adjusted coefficient of determination obtained which is 0.160, it shows that only 16% of the changes in stock returns depend on the profit of the next year and the rest is related to the variables that are not considered in this research. Therefore, the results of this research with the results of the researches of Mr. Linter in 1936 and Mr. Walter in 1973, which state that there is a positive relationship between the profit of the next year and the changes of the profit of the current year, and it is consistent and consistent with the hypothesis of profit marking, and it is not in conflict with the results of the research and with the documents presented in the theoretical framework of research and financial literature. The most stimulating topics in finance have been discussed in such a way that it has attracted the interest of economists of the current century and of the last five decades, and the topic has been comprehensive theoretical models and empirical studies. Profit sharing is debatable from two important aspects, from one point of view, profit sharing is a factor affecting the investments faced by companies, the more profit is divided, the less the internal resources of the company, in order to implement investment projects.. Profit sharing is debatable from two important aspects. From one point of view, profit sharing is a factor affecting the investments faced by companies. The more profits are distributed, the company's internal resources will decrease for the purpose of implementing investment projects, and the need for resources outside the company will increase, which can affect the company's stock price in the future. Therefore, the managers (with the aim of maximizing the shareholders' wealth) should always balance the different interests of the shareholders, so that they do not miss the profitable investment opportunities and fill the cash profit required by some of the shareholders. Therefore, the profit distribution decisions made by company managers are very sensitive and important, on the other hand, for-profit units can use their annual net profit to pay dividends to shareholders or use the funds for other purposes such as repaying debts or financing new investments. Paying dividends to the owners of ordinary shares is one of the ways that the company can directly affect the wealth of shareholders, for this reason, the issue of paying dividends and the amount of dividends is one of the interests of current shareholders and future investors.  The most important reason of the current study is to help investors, managers and capital market actors in directing funds and financial resources in companies that get better returns from these resources. This research is of the type of applied research and based on the method and nature, it is classified as correlational research, and by using simple and multivariable regression, it has investigated the correlation between dividend and stock returns. . The findings of the present research claim that the relationship between dividends and stock returns in companies listed on the Tehran Stock Exchange between 1383-1387 is linear and there is a greater correlation between the two in companies that distribute dividends. Also, the correlation between dividends and stock returns is higher in companies that distribute more profits.   The results of this research are with the results of the researches of Mr. Linter in 1936 and Mr. Walter in 1973, who state that there is a positive relationship between the future year's profit and the changes in the current year's profit and are compatible with the profit marking hypothesis, as well as with the results of the research results of Chenna Cheng and Praveen Kumar who provided evidence for the dividend marking hypothesis and concluded that there is a positive correlation between the changes in the current dividend and profits The future and return on equity in New York stock companies between 1974 and 1979 is consistent with the documentation provided in the theoretical framework of research and financial literature.

With the development and expansion of global trade, taking advantage of opportunities and facing economic bottlenecks and challenges and achieving sustainable economic growth has become important, and the growth of investment, production and directing public liquidity to productive economic sectors is one of the fundamental elements of realizing these things. , has been calculated. In this regard, the stock exchange, as one of the important and sensitive economic centers, plays a significant role in sustainable economic development by attracting and directing the investment and liquidity of different strata of society. The correct guidance of resources in this market depends on the development and timely disclosure of information.

Potential investors in company shares are among the main users of information in the stock market. This group usually obtains the information they need through the capital market. The decision of potential investors is basically related to the purchase of company shares.

Shareholders and investors use various factors to evaluate companies, including earnings per share (EPS) and dividends (DPS), whose changes can provide information about the current and future performance of the company.

Wide research literature on profits Dividends and their role of informing the market under the title of dividend information content hypothesis, and do managers use dividends as signaling tools regarding the future status of their companies? Often, the interpretations and tests of the dividend information content hypothesis have examined the issue of whether dividend changes can provide information about changes in the future profits of a business unit. We provide dividend information about the future profit of the business unit.