Global Study Reveals Dividend-Price Ratio Predicts Stock Market Trends Worldwide
The dividend-price ratio can predict stock returns and dividend growth rates in different countries. When a company's major shareholder controls cash-flow decisions, the stock price may reflect minority shareholders' expectations. This leads to stronger predictability of dividend growth rates when voting rights differ from cash-flow rights. The study found a positive link between dividend growth predictability and disparity, and a negative link between stock return predictability and disparity across multiple tests.