Results of several studies on companies listed on Stock Exchange suggest that dividends may influence the share price and, therefore, obey the dividend policy rather than strategic issues to some internal guideline. In his work, Gitman warns that the expected level of cash dividends is the most important performance variable, and from it so that shareholders and investors in the market determine the value of the shares (Allen and Michaely2002, p.224). After then, it will be a function of expected return the investor will buy shares in the company since the expected gains that would outweigh other investment. As shown, the decision to buy shares is based on the promise (expectations) to obtain / generate a certain level of profits. A company’s ability to convey good signals (increased profits for example) is known as informational.
In short, the expectations conveyed by the companies to project their earnings, for example, far from being considered as an objective indicator should be considered as a promise or expectation generator, hence dividends constitute at the end, an indicator more objective “economic and financial health” of the company issuing the shares (Allen and Michaely2002, p.226). Dividends were therefore considered as an indicator that affects the price of the shares, if the dividend increases (or coincides with the amount estimated by the shareholder) would expect an increase (or maintenance) in the price of the shares.