An Empirical Study on Signaling Hypothesis of China´s Listed Company´s Dividend Policy

According to signaling theory, dividend is an effective signal for company to transmit its inside information. This article studies the dividend policy of China under the guidance of the principle of signaling theory. With the method of demonstration, this paper tests (1) whether the unborn return of dividend-distributed company and dividend-not-distributed company are different; (2) whether cash dividend, stock dividend, and mixed dividend pass different information about unborn profitability; (3) whether changes of cash dividend are related to changes of unborn profit. Empirical result shows that managers of China´s listed companies passed information about unborn returns by dividend policy