The Relationship between Information Asymmetry and Dividend Policy Using the Logit Model

Abstract

The purpose of this study is to evaluate the effect of information asymmetry on dividend policy on listed firms on Tehran Stock Exchange. The factors that could affect the company's dividend policy were examined. For this purpose, the data of 147 listed companies on Tehran Stock Exchange was studied for the period 2006-2010. Logit regression method is used to estimate the model. After three stages of refinement, an optimized model was obtained. Research findings show that information asymmetry in companies listed on Tehran Stock Exchange has a negative impact on the company's dividend policy. These results do not confirm the signal model. The final model shows that among the rest of the company’s characteristics, profitability, size and risks have an impact the company's dividend policy.

Keywords

• Dividend Policy
• Information Asymmetry
• Signaling model
• Logit model