The Information Content of Dividend and Capital Structure Policies.(Statistical Data Included) From: Financial Management | Date: December 22, 1999| Author: Koch, Paul D.; Shenoy, Catherine | COPYRIGHT 1999 Financial Management Association. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group.Copyright information

We reexamine signaling and agency theories and argue that the free-cash-flow hypothesis implies a stronger information effect for both over- and underinvesting firms than for value-maximizing firms. Our results indicate that dividend and capital structure policies interact to provide significant predictive information about future cash flow. We also find a U-shaped relation between the amount of information and Tobin's q. The minimum of this relation occurs near a q value of one. T...

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