Dividend policy: signalling or maturity hypothesis?

Author analyses the assumptions of the dividend signalling hypothesis, using data from three European countries. The results do not give strong support for the dividend signalling hypothesis. In addition, author relates the signalling and the maturity hypotheses as two competing explanations for the information content of dividends. Although author finds some evidence for the maturity hypothesis, the results are not clear if dividend increases are a sign of maturity or used by firms to convey to the market their future prospects, suggesting that the dividend policy cannot be totally explained by neither the signalling hypothesis nor the maturity hypothesis.