Asymmetric Information and Dividend Policy in Emerging Markets: Empirical Evidence from Nigeria

Abstract

The study investigated the relationship between asymmetric information and dividend policy in Nigeria. To carryout the research work, the researcher employed the unit root test using the augmented Dickey Fuller test, the Johanson cointegration test and then vector error correction model to ascertain the long-run relationship between the variables. Granger causality test was also used. The researcher found supportive evidence for the dividend signaling theory. Thus, there is a positive and significant relationship between dividend policy and asymmetric information. The Granger causality tests at lag 2 suggested that dividend policy has causal impact on information asymmetry without a reverse or feedback effect. That is dividend policy drives or granger causes information asymmetry.