Investment as an opportunity cost of dividend messaging

This article examines the relationship between investment opportunities and the message of future stock profitability.

In order to investigate the subject and test the research hypotheses, linear regression models and 1500 data of company-year observations in the time return of 2007 to 1399 companies listed on the Tehran Stock Exchange have been used.

The results show that managers of companies with poor investment opportunities, instead of holding cash, distribute profits among investors. They invest positive value and distribute more dividends to shareholders next year to avoid the unintended consequences of reducing dividends. Also, changes in dividends in companies with strong and weak investment opportunities make it possible to predict changes in companies' future profits in the coming years, but the previous power is not significant.

The findings of this study show that changes in dividends contain information about the amount of investment opportunities facing the company.