The relation between information asymmetry and divided policy in Tehran stock exchange

Useful information is the base of decision of people who participate in capital markets. Accounting standard setters have always tried to reduce information asymmetry among investors and management of firms in order to make financial statements more useful for users. In this paper we examine how information asymmetry affects on dividend policy. It is anticipated the more information asymmetry, the more dividend as a signal to the market. In this research, bid-ask spread through 21 days before income annoycement is applied to measure information asymmetry. The numbers of sample companies are included from 97 observations during 2008 to 2010. Results show that there is a positive relation between information asymmetry and dividend policy while it confirms the signaling theory for dividend policy. In order to assure outcomes, the effects of control variables such as firm size, profitability and risk, are considered. Ultimately, findings demonstrate, that increasing of information asymmetry causes the growth in dividend payouts.