Author(s)

Yao Zhang ¹

Affiliation(s)

¹ Yunnan Normal University Business School, Kunming, China

Corresponding Author

Yao Zhang

ABSTRACT

Dividend policy is a considerable element that impact share price significantly, and the efficiency of dividend policy has gained increasing attention from stakeholders and researchers. There is no exact answer to the reasons and the aims of changing dividend policy and dividend payout methods. Thus, this paper examined the efficiency of dividend payout methods by testing the relationship between dividend policy and share price, the impact of dividend policy on share trend prediction, and the factors that caused dividend payout methods to change yearly. This paper selected 11 companies from the FTSE All-Share Index at London Stock Exchange and the data are collected from 2003 to 2018. By providing evidence that the dividend per share has a positive relation with share price, this paper found that the dividend policy has a significant relation with stock trends. This paper also examined the efficiency of firms investment information delivery of dividend policy by using the Dividend Growth Model and Capital Asset Pricing Model, the evidence suggested that the information delivered by historical dividend policy is useless for future decision-making. 

KEYWORDS

Dividend Policy, Share Price, Bird-in-Hand Theory, Signal Theory, Efficient-Market Hypothesis (EMH)

CITE THIS PAPER

Yao Zhang, Effectiveness of Dividend Policy on Investment Information Delivery. Accounting and Corporate Management (2024) Vol. 6: 123-131. DOI: http://dx.doi.org/10.23977/acccm.2024.060117.

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