Concluding Remarks

“Although a number of theories have been put forward in the literature to explain their pervasive presence, dividends remain one of the thorniest puzzles in corporate finance.” This doctoral thesis contributes to the vast academic literature intended to disentangle one of the most prominent academic puzzles. In this respect, my work adds a further piece to the dividend conundrum. While not casting doubt on the evident existence of dividends, I analyze the economic relevance of dividend changes in conveying information about earnings persistence to investors. Specifically, I contribute to recent evidence that dividends inform usefully about the characteristics of a firm’s earnings. That is, a dividend change which supplements a contemporary earnings innovation with the same sign contains useful information about the persistence of the current earnings change.