46-60

• Ίκκος, Άρης Δ.

A two-period model of the firm is constructed in a world which is characterised by uncertainty regarding earnings and production possibilities and by asymmetric information between insiders and outsiders. It is then shown that dividend announcements reveal more about the firm's value than earnings announcements do and that the two together reveal information about the investment policy of the firm that each one can not reveal. Moreover, Fisher-optimum investment policy is not sustainable through time. A solution to the problem of declaring dividends that fulfill the rational expectations criterion is proposed leading to double (allocative and X-) inefficiency of production.

• Economics and Business
• Computer and information sciences

• Finance
• Business
• Statistics

Περιέχει διάγραμμα, υποσημειώσεις και βιβλιογραφία, The basic idea behind this work originated during the time of the author's Ph. D. studies at the London Business School. He is grateful to the participants of the Finance Workshop at the LBS where an early version was presented, particularly Professors Dick Brealey, Ian Cooper and Steven Schaeffer, for their many helpful comments and suggestions. Of course all errors of omission and commission remain his responsibility. The author is also grateful to an anonymous referee for his/her suggestions.