Dividend Signals and Voluntary Disclosure

Sammanfattning: This study examines whether a change in dividends is connected with a change in future earnings and can thereby be interpreted as a signal from the management to the market. This is a well-debated subject that has been researched several times before this study, often with contradicting results. This thesis presents a new approach where it is investigated if firms choose between different ways to convey information to the market by adding the variable of voluntary disclosure. By doing this the thesis aims to investigate if the dividend of firms with a higher level of voluntary disclosure have a lower signalling value and thereby are less usable to predict future earnings. The sample consists of Swedish firms listed on Large Cap, Mid Cap, Small Cap and the Nordic Growth Market. Several models is used to investigate the relation between dividends and future earnings. The sample is then divided into three segments after level of voluntary disclosure and same models are then applicated these segments. This approach is also supplemented by a multiplicative interaction model. The results of this research showed that no clear connection could be proven and a change in dividend therefore can’t be seen as a credible signal of future earnings. Further no convincing evidence for whether dividends and voluntary disclosure was used side by side or instead of each other was found.