Abstract

In this study, the validity of signalling theory (information content of dividend) according to ownership structure/concentration was researched. As a measure of ownership concentration, the free float ratio of companies is used. The data period of the study is between the years 2010-2018 and the sample is composed of manufacturing companies listed on Istanbul Stock Exchange. The validity of the signalling theory was tested by examining stock price effect of dividend announcements (event study method) and by examinig the relationship between dividend changes and and profit changes in the years following the dividend change. It was determined that signalling theory is valid in companies with low ownership concentration (high free float ratio and that theory is not valid in companies with high ownership concentration. In other words, There ise a negative correlation between ownership concentration and the validity of signalling theory. The findings are in accordance with the essence of signalling theory. These findings revealed that ownership structure should be taken into consideration in empirical studies on the validity of signalling theory.