Predicting future earnings growth: a test of the dividend payout ratio in the Australian market

This paper examines the use of the payout ratio as a predictor of a firm’s future earnings growth. Recent evidence rejects the hypothesis that firm which retain a large portion of their earnings have strong future earnings growth. Higher dividend payout ratios instead correspond to higher future earnings growth. Examining both listed and delisted firms on the Australian stock exchange over the period 1989 to 2008, we provide further evidence that the dividend payout ratio is positively linked to future earnings growth. The results hold over both one, three and five year periods. Furthermore, our results rejected claims that such a relationship was caused by simple mean reversion in earnings. We find no evidence to support the cash flow signaling and free cash flow hypotheses as an explanation for this relationship.

Sprint interval and moderate-intensity continuous training have equal benefits on aerobic capacity, insulin sensitivity, muscle capillarisation and endothelial eNOS/NAD(P)Hoxidase protein ratio in obese men

Key points: Skeletal muscle capillary density and vasoreactivity are reduced in obesity, due to reduced nitric oxide bioavailability. Sprint interval training (SIT) has been proposed as a time efficient alternative to moderate-intensity continuous training (MICT), but its effect on the skeletal muscle microvasculature has not been studied in obese individuals. We observed that SIT and MICT led to equal increases in capillarisation and endothelial eNOS content, while reducing endothelial NOX2 content in microvessels of young obese men. We conclude that SIT is equally effective at improving skeletal muscle capillarisation and endothelial enzyme balance, while being a time efficient alternative to traditional MICT. Sprint interval training (SIT) has been proposed as a time efficient alternative to moderate-intensity continuous training (MICT), leading to similar improvements in skeletal muscle capillary density and microvascular function in young healthy humans. In this study we made the first comparisons of the muscle microvascular response to SIT and MICT in an obese population. Sixteen young obese men (age 25 ± 1 years, BMI 34.8 ± 0.9 kg m-2) were randomly assigned to 4 weeks of MICT (40-60 min cycling at ∼65% V˙O2 peak , 5 times per week) or constant load SIT (4-7 constant workload intervals of 200% Wmax 3 times per week). Muscle biopsies were taken before and after training from the m. vastus lateralis to measure muscle microvascular endothelial eNOS content, eNOS serine1177 phosphorylation, NOX2 content and capillarisation using quantitative immunofluorescence microscopy. Maximal aerobic capacity (V˙O2 peak ), whole body insulin sensitivity and arterial stiffness were also assessed. SIT and MICT increased skeletal muscle microvascular eNOS content and eNOS ser1177 phosphorylation in terminal arterioles and capillaries (P < 0.05), but the latter effect was eliminated when normalised to eNOS content (P = 0.217). SIT and MICT also reduced microvascular endothelial NOX2 content (P < 0.05) and both increased capillary density and capillary-fibre perimeter exchange index (P < 0.05). In parallel, SIT and MICT increased V˙O2 peak (P < 0.05) and whole body insulin sensitivity (P < 0.05), and reduced central artery stiffness (P < 0.05). As no significant differences were observed between SIT and MICT it is concluded that SIT is a time efficient alternative to MICT to improve aerobic capacity, insulin sensitivity and muscle capillarisation and endothelial eNOS/NAD(P)Hoxidase protein ratio in young obese men.

Book-to-market ratio, default risk and return implications: from a negative perspective

A paradox is created by the common practice in stock evaluation models of excluding stocks with a negative book equity (BE). If we interpret the book-to-market ratio as a proxy for distress risk, it makes no sense to exclude these negative BE stocks since they are, prima facie, most prone to distress risk. This paper reassesses the relationship between default risk, return and the book-to-market ratio by incorporating negative BE stocks into the study. We find that negative BE stocks carry higher default risks than their positive BE counterparts and that these risks are not totally offset by higher returns. This suggests that a default risk filter can be used in the investment universe selection process through which the portfolio return can be enhanced.