Dividend Signaling Theory and Asymmetric Information
Author: Christian Tanushev (University of National and World Economy, Sofia)
Keywords: decision-making, signals, payout policy, dividend. JEL:D81, D83, G35
The development of the capital market in Bulgaria requires the study of the influence of the dividend policy of public companies, whose shares are subject to stock exchange trading, on the behavior of investors. The first step of this analysis is to prepare a theoretical overview of the various theories devoted to this issue. This article focuses on dividend signal theory and the problem of information asymmetry between the company's managers, who prepare the proposal for distribution of net profit and dividend payments, and shareholders called to assess the fair value of the company's shares and potential risks to its growth in the future. The study focuses on the effectiveness of the policy of declaration of dividend payments for providing information and influencing the behavior of shareholders in developed capital markets.
