Dividend policy and market asymmetries

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

In 2002 new regulations arrived for public companies listed in the U.S. through the Sarbanes-Oxley Act. This regulation tried to impose more transparency in financial markets, implying less asymmetric information between firms and investors. The aim of this work is to verify if the regulation had the desired impact, comparing the dividend policy of firms before and after the introduction of this regulation. Thus, admitting that firms use dividend policy to signal our perspectives to investors, due to asymmetric information between investors and firms, a greater transparency should lead to an impact in the dividend policy.