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A Dividend Payment Effect in Stock Returns

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  • Ogden, Joseph P
Abstract
This paper presents evidence for the period 7/62-12/89 that individual NYSE and AMEX stocks provide relatively high average excess returns on the payment dates of quarterly cash dividends and several subsequent trading days. Additional results indicate that returns during the payment period: (a) are not a manifestation of the January, monthly or dividend yield anomalies; (b) are positively related to the stock's dividend yield; and (c) are higher for firms that have dividend reinvestment plans. These findings are consistent with a tendency by stockholders to reinvest dividend income into the stock of the paying firm, thereby increasing demand for the stock and raising its price. Additional evidence links the returns on these days with (previously documented) excess returns around the ex-dividend date. Copyright 1994 by MIT Press.

Suggested Citation

  • Ogden, Joseph P, 1994. "A Dividend Payment Effect in Stock Returns," The Financial Review, Eastern Finance Association, vol. 29(3), pages 345-369, August.
    • Handle: RePEc:bla:finrev:v:29:y:1994:i:3:p:345-69
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    Cited by:

    1. Md. Noman Siddikee & Noor Nahar Begum, 2016. "Volatility of Dhaka Stock Exchange," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(5), pages 220-229, May.
    2. Asli Bayar & Zeynep Onder, 2005. "Liquidity and price volatility of cross-listed French stocks," Applied Financial Economics, Taylor & Francis Journals, vol. 15(15), pages 1079-1094.
    3. Tschöpel, Michael, 2013. "Erfolgsfaktoren der MemberValue-Strategie von Genossenschaftsbanken: Ergebnisse einer empirischen Erhebung," Arbeitspapiere 134, University of Münster, Institute for Cooperatives.
    4. Roden, Foster & Stripling, Tom, 1996. "Dividend reinvestment plans as efficient methods of raising equity financing," Review of Financial Economics, Elsevier, vol. 5(1), pages 91-100.
    5. Nekat, Kai & Nippel, Peter, 2007. "The impact of a firm's payout policy on stock prices and shareholders' wealth in an inefficient market," Manuskripte aus den Instituten für Betriebswirtschaftslehre der Universität Kiel 619, Christian-Albrechts-Universität zu Kiel, Institut für Betriebswirtschaftslehre.
    6. Razvan Stefanescu & Ramona Dumitriu, 2023. "The Extended January Effect on London Stock Exchange," Risk in Contemporary Economy, "Dunarea de Jos" University of Galati, Faculty of Economics and Business Administration, pages 104-114.
    7. Foster Roden & Tom Stripling, 1996. "Dividend reinvestment plans as efficient methods of raising equity financing," Review of Financial Economics, John Wiley & Sons, vol. 5(1), pages 91-100, December.
    8. Jen-Chang Liu & Mark Yeats, 2015. "The Anomaly of 28 Days Between the Ex-Dividend and Payment Dates in Taiwanese Stock Markets," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 5(9), pages 1091-1118, September.
    9. Liu, Jen-Chang & Yeats, Mark & Chang, Jui-Lin, 2016. "The puzzle of 16 days between the ex-dividend and payment dates," Finance Research Letters, Elsevier, vol. 17(C), pages 251-256.

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