Do Investors Reinvest Dividends and Tender Offer Proceeds?

32 Pages Posted: 20 Jun 2005

Date Written: July 25, 2005


This study documents how much investors reinvest dividends and tender offer proceeds. I find that households reinvest only a small proportion of funds within two weeks, less than 1% of cash-dividends and around 10% of tender offer proceeds. Tender offer proceeds are more likely to be reinvested even when holding investor and size of the cash flow constant. This finding is consistent with the idea of investors having separate mental accounts for dividends and capital assets.

Keywords: Dividend reinvestment, dividend payment, self-control, mental accounting, tender offer

JEL Classification: G35, D12, G34

Suggested Citation

Rantapuska, Elias Henrikki, Do Investors Reinvest Dividends and Tender Offer Proceeds? (July 25, 2005). EFA 2005 Moscow Meetings, Forthcoming, Available at SSRN: or

Elias Henrikki Rantapuska (Contact Author)

Aalto University ( email )

P.O. Box 21210
Helsinki, 00101

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