Further Evidence on Dividend Yields and the Ex-Dividend Day Stock Price Effect

Posted: 30 Jun 1999

See all articles by Ravinder K. Bhardwaj

Ravinder K. Bhardwaj

Winthrop University

Leroy D. Brooks

John Carroll University - Boler School of Business

Abstract

Ex-dividend day stock price behavior supports discreteness and tax clientele effects. The effects are still found after the Tax Reform Act of 1986. Results reflect an effective tax advantage for capital gains taxes payable at realization, versus dividend taxes due quarterly. Evidence also supports short-term trader participation in the ex-day phenomenon when the difference between dividend income and the ex-dividend day price decrease exceeds transaction costs to trade. Results contradict prior research where a tax clientele effect is not found, but align with the same prior research when including a small number of contaminated observations.

JEL Classification: G12, G14, G35

Suggested Citation

Bhardwaj, Ravinder K. and Brooks, Leroy (Roy) D., Further Evidence on Dividend Yields and the Ex-Dividend Day Stock Price Effect. Available at SSRN: https://ssrn.com/abstract=168594

Ravinder K. Bhardwaj

Winthrop University ( email )

School of Business Administration
Rock Hill, SC 29733-0001
United States
803-323-2186 (Phone)

Leroy (Roy) D. Brooks (Contact Author)

John Carroll University - Boler School of Business ( email )

University Heights, OH 44118-4581
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,214
PlumX Metrics