The role of mid-year dividends as predictors of yearly earnings
New Zealand joint dividend and earnings announcement data is used to corroborate an aspect of dividend signalling espoused by Miller and Rock (1985). This is, that dividends announced within the course of a company's financial year may be interpreted by investors as a signal about the quality of its annual earnings, even when interim earnings figures are published. This is because interim earnings figures may thought to be less trustworthy than annual ones. Given that firms listed on the New Zealand stock Exchange are required to furnish half-yearly financial reports, and that these reports disclose both EPS and dividend information, the simultaneity and semi-annual frequency of New Zealand company EPS and DPS information provide a natural test of differences between investor reactions to within-year and end-of-year announcement data with respect to Miller and Rock's contention.