Abstract

This study empirically investigates the impact of earnings transparency, a qualitative attribute of accounting information, on corporate dividend policy. Furthermore, it examines how managerial ability, as a key decision-making factor, moderates the relationship between earnings transparency and dividend payout ratios. Using data from December-year-end firms listed on the Korea Stock Exchange from 2002 to 2024, and employing Barth et al.'s (2013) earnings transparency measure and Demerjian et al.'s (2012) DEA-based managerial ability score, the key findings are as follows. First, higher earnings transparency is significantly associated with an increase in dividend payout ratios. Second, in firms with high managerial ability, the positive effect of earnings transparency on dividend payout ratios is attenuated. These results suggest that while earnings transparency serves as a significant driver for dividend payments, this effect varies depending on the managerial ability of the firm's decision-makers. This study contributes to the literature by demonstrating that accurately predicting corporate dividend potential requires considering not only the transparency of earnings information but also the characteristics and resource allocation strategies of the management.

Keywords

• Earnings Transparency
• Accounting Transparency
• Managerial Ability
• Managerial Characteristics
• Dividend Payout Ratio
• Dividend Policy

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