A note on transaction costs and the interpretation of dividend drop-off ratios

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dc.contributor.author Partington, G
dc.contributor.author Walker, S
dc.date.accessioned 2009-12-21T02:37:12Z
dc.date.issued 2001-11
dc.identifier.citation Accounting and Finance, 2001, 41 (3), pp. 229 - 241
dc.identifier.issn 0810-5391
dc.identifier.other C1 en_US
dc.identifier.uri http://hdl.handle.net/10453/5190
dc.description.abstract In a recent edition of this Journal, Bartholdy and Brown (1999) presented an analysis of the ex-dividend share price behaviour of shares listed on the New Zealand Stock Exchange. The authors conclude that their results are consistent with the tax clientele effect (driven by long-term investors) and that there is little or no support for the short-term trading hypothesis. Our purpose is to highlight the importance of transaction costs in analyses such as Bartholdy and Brown's. We argue that their results have an alternative interpretation because their analysis excludes the impact of transaction costs. We extend their model to include transaction costs and show that their results are not necessarily inconsistent with the short-term trading hypothesis. A critical point of our analysis is that, in the presence of transaction costs, the equilibrium drop-off ratio for dividend strip traders will be less than one, and, in some cases, can be less than the equilibrium drop-off ratio for long-term investors. © AAANZ 2001.
dc.language eng
dc.title A note on transaction costs and the interpretation of dividend drop-off ratios
dc.type Journal Article
dc.description.version Published
dc.parent Accounting and Finance
dc.journal.volume 3
dc.journal.volume 41
dc.journal.number 3 en_US
dc.publocation Oxford, UK en_US
dc.identifier.startpage 411 en_US
dc.identifier.endpage 414 en_US
dc.cauo.name Cell and Molecular Biology en_US
dc.personcode 887509
dc.personcode 930555
dc.description.keywords Dividend valuation
dc.description.keywords Ex-dividend
dc.description.keywords Taxes
dc.description.keywords Transaction costs
pubs.embargo.period Not known
pubs.organisational-group /University of Technology Sydney
pubs.organisational-group /University of Technology Sydney/Faculty of Business
pubs.organisational-group /University of Technology Sydney/Faculty of Business/Finance
utslib.copyright.status Closed Access
utslib.copyright.date 2015-04-15 12:17:09.805752+10
pubs.consider-herdc true
utslib.collection.history Closed (ID: 3)

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