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Abstracts prior to volume 5(1) have been archived!

Issue 5(1), October 2010 -- Paper Abstracts
Girard  (p. 9-22)
Cooper (p. 23-32)
Kunz-Osborne (p. 33-41)
Coulmas-Law (p.42-46)
Stasio (p. 47-56)
Albert-Valette-Florence (p.57-63)
Zhang-Rauch (p. 64-70)
Alam-Yasin (p. 71-78)
Mattare-Monahan-Shah (p. 79-94)
Nonis-Hudson-Hunt (p. 95-106) 



JOURNAL OF ACCOUNTING AND FINANCE 


Ex-Dividend Day Stock Price Behavior: Evidence from the 2003 Tax Cut

Author(s): Vusal Eminli

Citation: Vusal Eminli, (2018) "Ex-Dividend Day Stock Price Behavior: Evidence from the 2003 Tax Cut",  Journal of Accounting and Finance, Vol. 18, ss. 4, pp. 95-100

Article Type: Research paper

Publisher: North American Business Press

Abstract:

This paper analyzes the behavior of ex-day prices when one of the imperfections is naturally removed as a result of the 2003 U.S. tax legislation, and attempts to observe if the ex-day price drop is affected by taxes. This equality of tax rates provides for an ideal condition under which the interaction between the ex-day price behavior and taxes can be examined. Consistent with the tax-effect hypothesis, I find that the price change-to-dividend ratio increased significantly after the elimination of preferential tax treatment of capital gains. Moreover, this evidence also contrasts the short-term trading hypothesis, since the new law did not change the tax incentives of short-term traders. The significant change in the ratio shows that the market is not dominated by short-term traders instead the marginal stockholders are long-term individual investors.