THE IMPACT OF INFORMATION ENVIRONMENT ON DIVIDEND PAYMENT DECISIONS: PERSPECTIVES FROM NON-GAAP EARNINGS DISCLOSURES

Abstract

This study examines the impact of a corporate’s information environment, characterized by the extent of Non-GAAP earnings disclosures, on dividend payment decisions. Based on panel data comprising over 54,000 company-level observations in the United States from 2004-2021, the research finds that firms disclosing Non-GAAP earnings tend to decrease dividend payout ratios, reduce the probability of initiating or increasing dividends, and increase the probability of dividend cuts. This finding is consistent with signaling theory, suggesting that Non-GAAP earnings disclosure reshapes how companies convey information to the market, diminishing the traditional role of dividends as a signaling tool for company financial conditions. The study expands our understanding of how non-standard information environments influence corporate financial management in modern business.