Abstract
The study explores the effect of financial transparency on dividend smoothing behavior. We analytically show that dividend smoothing should increase when shareholders cannot observe cash flow realizations. Using exogenous variation in financial transparency created by the SOX, we find that less transparent firms as measured by higher dispersion of analyst forecasts and lower excess audit fees reduced dividend smoothing more after the legislative change, as compared to other dividend-paying firms in the sample. Our study complements recent studies considering the firm's dividend smoothing as an alternative corporate governance mechanism.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
