What is a dividend signal?
Dividend signaling is the theory in economics that the company's dividends provide information on future earnings. According to this theory, if society suggests that dividends will increase, it means that it expects higher income in the coming years. Scientists have studied dividend notifications and financial records extensively to determine whether this theory is in practice. The results of their research were mixed, suggesting that while dividend signaling can in some cases be a predictive tool, in others it can more precisely reflect past economic development. They may decide to issue a dividend when the plowing of profits back to the company for development and growth is not necessary or practical. At that time, officials decide to offer dividend, usually make announcements and provide information about the amount and date so that shareholders know what to expect. These notifications will be closely expected and observed because investors believe they can provide information about the company's financial health.
If the company does not offer dividends, it could suggest that it invests considerable investment with the aim of growth, or that it is not financially and cannot afford to share profit sharing measures. Frequent high dividends may mean that companies are doing well, but it could also be a warning signal that the company will not invest in new assets, maintenance and growth activities. The supportive dividend signaling claims that when the dividends announcement includes an increase, it means that the company's council feels confident in future earnings.
Support for this theory can be found in the argument that if the company expects to earn more, it can also expect to pay more profit sharing for shareholders. It could also use the dividend notifications Jakutroj to create a coded signal for investors to increase confidence. By proving the belief that in the future years will be done well through Dividend SignalIZACE, society can cause investors to feel more comfortable, which can control the value of inventory.
Some research suggests that dividend signaling can be accurate, and some companies actually issue announcements of larger dividends when they predict large profits. Other studies show that it is actually a reflection of past profits; The company increases the size of its dividends after well when they feel comfortable to distribute more profits for shareholders because they do not have to maintain funds for emergencies or growth activities.