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An analysis of the factors related to changes in dividends and changes in future profits in Iran's capital market

Number of pages: 307 File Format: word File Code: 32213
Year: 2010 University Degree: Master's degree Category: Librarianship
Tags/Keywords: Changes in earnings per share - Dividend changes - dividends - future profit - Market value to book value - profit - Return on salary - Securities - stock market - Stockholders
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  • Summary of An analysis of the factors related to changes in dividends and changes in future profits in Iran's capital market

    Dissertation for Master's Degree

    Trend: Accounting

    Abstract:

    The purpose of this research is to examine the relationship between changes in dividends, earnings per share and changes in earnings per share with changes in future earnings. In this research, information related to the balance sheet, profits and cash flow of 100 companies active in the stock market Tehran securities have been used for the fiscal years 2010 to 2015. To determine the relationships, 12 hypotheses were proposed and correlation and regression tests were used to test them. The hypotheses were proposed based on the degree of correlation between changes in dividends, earnings per share and changes in earnings per share with changes in future profits for companies that have the ability to predict cash flows, market-to-book value ratios, and returns on equity. The results of the research show that between Changes in dividends, earnings per share, and changes in earnings per share for companies with higher book value, higher return on equity, and lower cash flow predictability, have a stronger relationship with changes in future earnings. which among the main variables of the profit per share and among the virtual variables of the book market value has a better effect on future profit changes. Also, the value of the correlation coefficient (R) increased from 0.490 for the three main variables to 0.621 for the total of the main and virtual variables, which indicates the appropriateness of choosing the mentioned virtual variables. book, return on equity.

    Introduction:

    Given that Iran's economy has extreme fluctuations and funds are mainly directed towards speculation, therefore, it is of particular importance to create conditions for investors to choose investment in securities and company shares among various investment options. In other words, with a better understanding of the factors affecting the supply and demand of shares in the stock exchange, which leads to greater transparency of the stock exchange, the transfer of capital from non-productive activities to productive activities and the creation of employment and economic prosperity will be provided. The theory of dividend signaling is based on the fact that the management of a company has more information about the company's future prospects than the company's shareholders. According to this theory, if the company has more dividends than what is predicted by the market stated, this issue may be a sign that the company's future financial outlook is brighter than its expected status. If the managers of a company believe in the signaling theory, they will always be very cautious about the message that can be inferred from their dividend decision to the investors. Even if the company has some attractive investment opportunities that are required to retain earnings to finance it, the management may abandon them if accepting these opportunities leads to preventing the payment of dividends expected by investors and sending an unfavorable message to the market. Therefore, it seems that if a company makes a decision on dividend slow, those investors whose tastes are in harmony with the company's dividend policy and those investors who consider this policy as good news will buy shares and will remain shareholders of the company until this policy changes. In fact, the announcement of dividends contains information about the company's future prospects. Therefore, the market reaction on the date of the announcement is a test for the information content and signaling of dividends. According to the signaling hypothesis, this research seeks to investigate and identify the relationships between changes in dividends, earnings per share and changes in earnings per share with changes in future earnings and taking into account variables such as predictability of cash flows, market to book value and return on equity. Therefore, it can be expected that the investors of the country's capital market, with a better understanding of the effects of changes in dividends, profit per share and changes in profit per share, regarding the future profits of various industries, will invest in the shares of companies that will enable them to obtain maximum returns and this will make the capital market and the country's economy flourish.In this regard, the performance of managers who have been able to maintain the efficiency of various factors in the company's performance, also increase the company's profitability and increase the shareholders' wealth by increasing the company's value and implementing projects with positive net present value is important. rtl;">

    Chapter One

    General research

    1-1 Introduction

    The task of the stock exchange is to create a regular and permanent market for the purchase and sale of all kinds of securities through which it is possible to attract public capital by companies. This task is performed correctly when the market operates in the form of a perfect competition market and has a high degree of specialization. One of the essential features of perfect competition is the availability of perfect information for free and quickly and easily. If people are going to invest of their own free will, the related information should be fully and transparently provided to the people. The stock exchange should be able to publish information accurately at any moment and by interpreting it in the characteristics desired by investors, it can provide a correct assessment of the economic status and performance of companies as well as their stock prices at any moment. The law, rules and regulations of the stock market must also act to ensure the security of activity in this market and protect the interests of investment. One of the main users of information about stock companies in the stock market are potential investors in the companies' shares. This group usually gets the information they want through the stock market. Therefore, shareholders and investors expect the capital market to confirm the accuracy of the information provided by the listed companies so that they can get the benefits of buying, holding and selling their shares. Shareholders and investors use various factors to evaluate companies, including earnings per share [1] EPS and dividend [2] DPS, whose changes can provide information about the company's status and performance in the present and future. The capital market, like other markets, includes a number of buyers and sellers, and the competition between sellers increases the efficiency of the company's performance, and the sign of this efficiency of the company will be reflected in the optimal use of the provided capital, the increase in profit and profitability of that company. Dividend profit and profit per share can be used as factors to control and evaluate the performance of the company's management by the shareholders. It is the shareholders who, in addition to maintaining the efficiency of various factors in the company's performance, have also increased the company's profitability and increased the wealth of the shareholders through the increase of the company's value and the implementation of projects with positive net present value. Also, the relationship between dividend and profit per share shows the company's dividend policy. Dividend policy can attract new shareholders to the company. This question, does the change in dividend include information about changes in the future profits of companies? It is a topic that has attracted a lot of attention in research and is considered as a test of the dividend signaling hypothesis[3]. So that company managers increase dividends in order to convey a clear perspective of profitability and more positive cash flows. In this research, the dividend signaling hypothesis has been examined and tested by considering the effects of variables such as the predictability of cash flows, the ratio of market value to book value, and return on equity.

    In the first chapter, after stating the problem, the importance and necessity of the research topic and research objectives are stated, and then we present the theoretical framework, analytical model, and research hypothesis.

    2-1 Statement of the problem:

    Dividend[4] is the return that ordinary shareholders receive from the company for the investment they have made in the company.

  • Contents & References of An analysis of the factors related to changes in dividends and changes in future profits in Iran's capital market

    List:

    Abstract: 1

    Introduction: 2

    Chapter 1: Research aspects

    1-1 Introduction. 5

    2-1 Statement of the problem: 6

    3-1 Importance and necessity of the research topic: 8

    4-1 Research objectives. 9

    5-1 theoretical framework of the research. 10

    6-1 Research model and method of measuring variables. 13

    7-1 Research hypotheses: 15

    8-1 Definition of words and terms. 16

    Chapter Two: Review of Research Literature

    1-2- Introduction. 19

    2-2 The concept of profit at the structure level. 21

    1-2-2 Trading approach in profit measurement. 21

    2-2-2 activity approach in profit measurement. 22

    3-2 Concepts of profit at the meaning level (relationship with economic realities) 22

    1-3-2 Profit as a measure of efficiency. 22

    2-3-2 Accounting profit compared to economic profit. 23

    4-2 Concepts of profit at the operational level (how it is used by users) 25

    1-4-2 Profit as a means of forecasting. 25

    2-4-2 capital market approach. 26

    5-2 The concept of comprehensive profit in financial reports. 27

    6-2 Accounting profit. 27

    2-7 Profit and its importance as a forecasting tool. 27

    8-2 communication loops of profit and stock price. 28

    1-8-2 Relationship between future accounting profit and current accounting profit. 28

    9-2 Forecasting future profits from current profits. 29

    10-2 The relationship between profit and stock price. 29

    11-2 Net profit as a factor for cash flow forecasting. 30

    12-2 Providing information about cash flow and its forecast. 31

    13-2 Prediction of future cash flows. 32

    14-2 Criteria for evaluating the financial performance of companies. 34

    2-14-2 Economic criteria to evaluate the performance of companies. 39

    2-15 dividend (DPS. 40

    2-16 research background. 71

    Chapter three: research implementation method

    1-3 introduction. 84

    2-3 research method. 84

    3-3 study community. 85

    4-3 research model and method of measuring variables. 85

    Sample 88

    3-7 Method of data analysis 90

    1-8-3 Simple linear regression analysis. 96

    Statistical analysis software

    4th chapter: 100

    Descriptive indicators of variables 100

    3-4 Research hypothesis analysis. 104

    1-4-4 Checking the assumption of normality of the variables: 104

    2-4-4 The summary of the analyzes by each hypothesis is described as follows: 105

    1-2-4-4 Analysis and test of the first main hypothesis: 105

    2-2-4-4 Analysis and test of the second main hypothesis. 108

    3-2-4-4 Analysis and testing of the third main hypothesis. 112

    -2-4-4 Analysis and hypothesis testing of three main variables. 168

    -2-4-4 Analysis and hypothesis testing of three main variables and three auxiliary variables. 169

    Chapter Five: Conclusions and Suggestions

    1-5-Introduction: 176

    2-5-Research Summary. 176

    3-5 Hypothesis test results. 177

    1-3-5 Results of the first main hypothesis. 177

    1-1-3-5 Results of sub-hypothesis 1-1-1. 178

    2-1-3-5 Results of sub-hypothesis 2-1-1. 178

    3-1-3-5 Results of sub-hypothesis 1-2-1. 179

    4-1-3-5 Results of sub-hypothesis 2-2-1. 179

    5-1-3-5 Results of sub-hypothesis 1-3-1. 180

    6-1-3-5 Results of sub-hypothesis 2-3-1. 180

    2-3-5 Results of the second main hypothesis. 180

    1-2-3-5 Results of sub-hypothesis 1-1-2. 181

    2-2-3-5 Results of sub-hypothesis 2-1-2. 181

    3-2-3-5 Results of sub-hypothesis 1-2-2. 182

    4-2-3-5 Results of sub-hypothesis 2-2-2. 182

    5-2-3-5 Results of sub-hypothesis 1-3-2. 183

    6-2-3-5 Results of sub-hypothesis 2-3-2. 183

    3-3-5 Results of the third main hypothesis. 183

    1-3-3-5 Results of sub-hypothesis 1-1-3. 184

    2-3-3-5 Results of sub-hypothesis 2-1-3. 184

    3-3-3-5 Results of sub-hypothesis 1-2-3. 185

    4-3-3-5 Results of sub-hypothesis 2-2-3. 185

    5-3-3-5 Results of sub-hypothesis 1-3-3. 186

    6-3-3-5 Results of sub-hypothesis 2-3-3. 186

    4-3-5 Results of three main variables and dependent variable. 187

    5-3-5 The results of three. 187

    5-3-5 Results of three main variables and three virtual variables with dependent variable. 187

    4-5 general conclusions of the research. 188

    5-5 suggestions. 189

    1-5-5 suggestions based on the findings of research hypotheses. 189

    2-5-5 Other suggestions. 191

    3-5-5 suggestions for future research. 191

    6-5 research limitations. 192

    Appendices

    Appendix A related to the names of statistical sample companies. 195

    Sources and sources

    Persian sources: 201

    Latin sources: 205

    Internet sources. 206

    Source:

     

     

    Persian sources:

     

    Azer, Adel and Mansoormomeni, 1380, "Statistics and its application in management", Samt publications, first volume, sixth edition, Tehran, p. 6.

    Azer, Adel and Mansoormomeni, 1385, "Statistics and Its application in management", Samt Publications, second volume, 9th edition, Tehran, pp. 183-212.

    Islami Bidgoli, Gholamreza, 1370, "Review of theories, policies and policy of profit sharing (1)", Knowledge Management Quarterly, No. 14, 29-14.

    Etmadani, Hossein and Parichalaki, 1384, "The relationship between performance and cash dividend distribution in Companies admitted to the Tehran Stock Exchange during 1377-381", Journal of Accounting and Auditing, 12th year, No. 39, Tehran, pp. 31-47.

    Amani, Korosh, 1376, "Investigation of the relationship between dividends and stock prices of companies admitted to the Tehran Stock Exchange", Master's thesis in accounting, University of Tehran.

    Bakhtiari, Mahmoud, 1382, "Investigation and comparison of the effect of dividend per share, dividend per share and the company's profit growth rate on the stock price in Tehran Stock Exchange", master's thesis in financial management, Imam Sadegh University, Faculty of Education and Management.

    Borhani, Seyyed Mohammad, 2017, "Usefulness of dividend information on forecasting future profits", master's thesis in accounting, Allameh Tabatabai University.

    Bahram Far, Naqi and Kaveh Mehrani. 1383, "The relationship between earnings per share, dividends and investment in companies listed on the Tehran Stock Exchange", Journal of Accounting and Auditing, Year 11-Number 36, pp. 46-27.

    Taghi Puriani Gilani, Youssef, 1384, "Evaluating the role of earnings per share and dividends per share on the stock price of companies listed on the Tehran Stock Exchange", Master's Thesis in Accounting, Azad University Islamic, Research Sciences Unit, Tehran.

    Tehrani, Reza, 2018, "Financial Management", Negah Danesh Publications, Tehran, p. 351.

    Jehankhani, Ali and Asgharsajadi, 2014, "The Application of the Concept of Economic Added Value in Financial Decisions", Financial Research, Second Year, No. 5 and 6, p. 68-86).

    Hafez Niya, Mohammad Reza, 2012, "Introduction On Research Methodology in Humanities", Samit Publications, 8th Edition, pp. 45-44.

    Khadem Zahar Shahreza, Alireza, 1380, "Investigation of the relationship between dividend policies and stock price changes in companies listed on the Tehran Stock Exchange", Master's thesis in Accounting, Tarbiat Modares University, Tehran, p. 67.

    Khaki, Gholamreza, 1387, "Research method with an approach to thesis writing", publications Reflection, 4th edition, pp. 305-303.

    Khajawi, Shekraleh and Hamid Elhiari Abhari, 1387, "Investigating the information content of dividends, book value and net profit on the share price of companies listed on the Tehran Stock Exchange", Financial Research, No. 22, pp. 3-20.

    Khorshidi, M. and Hamid Qureshi, 1381, "Investment Management Advanced", Aaghah Publications, second edition, p. 254.

    Khosh Taynet, Mohsen and Najme Hajian, 1387, "The effect of dividend increase on investors' behavior", Journal of Accounting and Auditing, Year 15-Number 51, p. 3-18.

    Delavar, Ali, 1388, "Theoretical and Scientific Foundations of Research in Human and Social Sciences", Rushd Publications, fourth edition, Tehran, p. 122.

    Dovani, G., 1384, "Stock market, stocks and how to price stocks", first publication, fourth edition, p. 153.

    Raymond P. Novo, 1388, "Financial Management", translated by Ali Jahankhani and Ali Parsaiyan, Semat Publications, 15th edition, Tehran.

    Sarbanha, Mohammad Reza, 1382, "Effect of Dividends on the Stock Prices of Companies", Doctoral Dissertation of Accounting, Allameh Tabatabai University.

    Sarmad, Z.  et al., 1381, "Research Methodology in Behavioral Sciences", Tehran, Aghaz Publishing.

    Siah Raziani, Mohsen, 1388, "Investigating the relationship between profit quality and cash profit distribution in companies listed on the Tehran Stock Exchange", Master's Thesis, Islamic Azad University, Maroodasht Branch, 1388.

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