Contrary to the central prediction of signaling models, changes in profits do not empirically follow changes in … dividends. We show both theoretically and empirically that dividends signal safer, rather than higher, future profits. Using the …

In this paper we develop a generalization of the Baker and Wurgler (2012) signaling model where investors are loss … policy properties. In equilibrium firms with riskier earnings are less likely to pay dividends, however, those that pay … likely to pay positive dividends. There is a clientele effect. Investors’ preferences and choices affect the payout policy …

perspective, dividends should be minimized. We review the theoretical as well as empirical literature on Signaling …-related literature on dividends explores the implications of differential taxes on dividends and capital gains on stocks’ valuation and … firms’ propensity to pay out cash in the form of dividends. The issues investigated in this literature are of central …