Analysis of the effects of dividend smoothing on the relevance of accounting information in Brazil

Abstract

This article aimed to analyze the effects of dividend smoothing on the relevance of accounting information. By estimating Lintner's partial adjustment dividend model (1956), the variable dividend adjustment speed ( ) proxy for dividend smoothing was extracted, which was included in the relevance model of the accounting information of Collins, Maydew & Weiss (1997). As a result, it was possible to point out that there is little dividend smoothing in Brazil and that this variable has positive and negative effects, respectively, on earnings and shareholders' equity. From these results, it is possible to infer that, due to their aversion to the risk of expropriation, minority investors would tend to demand the maximum possible dividends and the minimum retained earnings, regardless of investment opportunities. The results observed converge towards the acceptance of the outcome model, which implies that the dividend smoothing should be considered as a monitoring instrument as a way of increasing the explanatory power of accounting information and minimizing the risk of expropriation of minority shareholders.

Keywords

• suavização de dividendos
• relevância da informação contábil
• efeito resultado
• efeito substituição.