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Dividends in the Czech Capital Market and an Optimal Investment Strategy

Author

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  • Miloš Filip

Abstract

The average dividend yield on the Czech capital market from 1995 to 1999 was 4.8%. Stocks with high dividend yields (>5.5%) exhibited non-rational price pressures after their ex-dividend date. The average over-the-period return in the four days following the ex date was negative 4.7% ? stock prices continued to fall even though the stocks were bought without dividends. Short-term investors therefore suffered a capital loss that was greater than both the net and gross dividend paid. Simulated investment strategies suggest that it is reasonable for an investor to collect dividends on low-dividend-yield stocks

Suggested Citation

  • Miloš Filip, 2000. "Dividends in the Czech Capital Market and an Optimal Investment Strategy," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 50(12), pages 685-698, December.
    • Handle: RePEc:fau:fauart:v:50:y:2000:i:12:p:685-698
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    File URL: http://journal.fsv.cuni.cz/mag/article/show/id/876
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    More about this item

    Keywords

    dividends; ex-dividend day; efficient market; investment strategy;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G35 - Financial Economics - - Corporate Finance and Governance - - - Payout Policy

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