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Ex-dividend date stock behavior and the clientele effect: Evidence around a tax reduction

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  • Muñoz, Ercio
  • Rodriguez, Arturo

Abstract

This study analyzes the behavior of stock prices around the ex-dividend date focusing on the effects of a major tax reduction. Using the 40 most heavily traded shares on the Santiago Stock Exchange, the study evaluates price drop ratios using various measures of ex-dividend day prices. The findings indicate that the dividend tax reduction has an effect on the price drop ratio; this result is consistent with the clientele effect hypothesis.

Suggested Citation

  • Muñoz, Ercio & Rodriguez, Arturo, 2017. "Ex-dividend date stock behavior and the clientele effect: Evidence around a tax reduction," Global Finance Journal, Elsevier, vol. 32(C), pages 55-61.
    • Handle: RePEc:eee:glofin:v:32:y:2017:i:c:p:55-61
    DOI: 10.1016/j.gfj.2016.06.003
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    References listed on IDEAS

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    1. Boyd, John H & Jagannathan, Ravi, 1994. "Ex-dividend Price Behavior of Common Stocks," The Review of Financial Studies, Society for Financial Studies, vol. 7(4), pages 711-741.
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    Cited by:

    1. Hadfi Bilel & Kouki Mondher, 2021. "What Can explain catering of dividend? Environment information and investor sentiment," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 45(3), pages 428-450, July.
    2. Suhendra . & Etty Murwaningsari, 2019. "The Effect of Accounting Information and Tax Information on Trading Value Moderated by Competitive Strategy," Journal of Accounting, Business and Finance Research, Scientific Publishing Institute, vol. 6(2), pages 43-50.

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    More about this item

    Keywords

    Dividends; Clientele effect; Taxes;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance

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