Challenging the Substitutional View: Evidence of the Complementary Informational Role of Dividends and Earnings in Sweden

Sammanfattning

Whether dividends substitute for or complement the information in earnings announcements remains an open question outside the U.S. context. We address this gap by examining Swedish listed firms from 2005 to 2024, evaluating three mechanisms through which dividends could reduce the informational role of earnings: stock-price reactions, earnings-forecast value, and investor attention at the announcement. We estimate multivariate regressions across several matching and weighting methods to account for differences between dividend-paying and non-paying firms. Across all tests, we fail to find evidence that dividends weaken the informational content of earnings. Market reactions to earnings news are generally stronger for dividend-paying firms, earnings surprises remain at least as informative about future performance, and investor attention does not vary with payout status. While significance levels are modest, the directional patterns are consistent. Overall, we find weak evidence that dividends and earnings serve complementary rather than substituting informational roles in the Swedish setting.