A Discussion on the Signaling Hypothesis of Dividend Policy

This paper discusses the signaling hypothesis of corporate dividend policy. We discuss this traditionally important matter in the field of corporate finance by introducing both classic and newest related studies. There seem to be some general agreements on the dividend-signaling hypothesis; however, our discussions include the following new viewpoints. First is the possibility of the firm risk changes after dividend policy changes. Second is the linkage between market efficiency and dividend policy. Third is the reality of dividend policy changes as signals by corporate managers. We consider that our many-sided discussions on the dividend-signaling hypothesis with reviewing both classic and newest literature contribute to theoretical and empirical future related research in this field.