Question

what the relation between earning surprise and dividend policy?

Answer 1

If an earning surprise is positive, this will lead to a positive abnormal return or vice versa. Usually the earning surprises happen at the beginning of the quarter following the presentation of the past quarter performance.

The financial literature does not document a lot of incidences when earning surprises lead to changes in dividend policies because the dividend policy is usually set for a year at least during which surprises might come in either direction.