Abstract: Will dividend-smoothing policy signals in the capital market support the tilting of corporate economic resources toward innovative investment projects? If so，what is the mechanism behind this action? Will this phenomenon continue to exist after separating the effects of “differential cash dividend policy”? To answer these questions，this study utilizes data for A-share listed companies in Shanghai and Shenzhen from 2007 to 2020 as samples to examine the impact of dividend smoothing on corporate innovation investment，and explore the mechanism of its effect，based on the dividend signal theory and the catering theory． The main result implies that firms with non-smoothing dividend policy invest more in innovative projects，and the group regression results suggest that this phenomenon is more obvious in non-state enterprises and growing enterprises． In addition，this study finds support for the existence of a rational catering channel，in which investor sentiment directly stimulates non-smooth dividend policy to promote firms' innovation investments． Further，this paper analyzes the effect of“ differential cash dividend policy”，which shows that for firms that pay dividends in order to qualify for refinancing，the promotion effect of volatile dividend policy on R&D investment remains． Although differential cash dividend policy can effectively alleviate the current situation of “micro-dividend” payments for listed enterprises in China，it also exacerbates the shortage of free cash flow within the firms，which is not conducive to the development of non-state-owned companies and growth-stage companies． The signal of unstable dividend policy triggers changes in the share price and external financing environment of companies in the Chinese capital market，which in turn significantly affect resource allocation of the enterprises．The findings provide empirical evidence to explore the link between the signaling impact of the capital market and the development of the real economy．

Key words: dividend smoothing; dividend signal theory; R&D investment; catering theory; differential cash; dividend policy