We examine the effect of firm-level information environment on the signaling role of dividends for a sample of foreign firms that cross-list on U.S. stock markets in the form of American Depository Receipts (ADRs). While theory suggests a signaling role of dividends under information asymmetry (e.g., Bhattacharya 1979), empirical evidence using U.S. data has provided little support. In fact, Li and Zhao (2008) find that U.S. firms with greater information asymmetries are less likely to pay, initiate, or increase dividends. Theoretical analysis also suggests that dividend increases convey credible information about firms’ growth prospects (Miller and Modigliani 1961), but empirical research again finds little U.S. evidence that dividend changes predict abnormal increases in earnings (e.g., DeAngelo, DeAngelo, and Skinner 1996; Benartzi, Michaely, and Thaler 1997; Grullon, Michaely, Benartzi, and Thaler 2005). Moreover, survey evidence shows that U.S. corporate executives dismiss the use of dividends as a signaling device, given other established and less costly channels to convey firm-specific information to shareholders (Brav, Graham, Harvey, and Michaely 2005). We revisit this inconsistency between theory and empirical evidence regarding dividend signaling by examining a sample of cross-listed non-U.S. firms. One potential explanation for the inconclusive empirical evidence is that the variation in information asymmetry across publicly listed U.S. companies is insufficient to provide adequate test power. A similar point has been made by Leuz and Verrecchia 2000 in their examination of the economic benefits of increased disclosure, as well as by Huddart and Ke 2007 when they explain the profits of informed trading. In contrast, significant variation exists in the information environment of cross-listed non-U.S. firms (Leuz and Verrecchia 2000; Lang, Lins, and Miller 2003). We have thus chosen the ADR setting since the variation in firms’ information environment provides a better opportunity of detecting dividend signaling. An important issue for our study is whether the information environments of ADR firms can create incentives for these firms to use dividends as a credible signaling device. First, to the extent that cross-listed firms are held to different accounting standards than the typical U.S. firms, U.S. investors may not have access to information on ADR firms that is of similar quality to that presented by U.S. firms (e.g., Lang et al. 2003; Leuz 2003; Lang, Raedy, and Wilson 2006). Many ADR firms also have fewer communication