A Note on Transaction Costs and the Interpretation of Dividend Drop-off Ratios

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dc.contributor.author Walker, S. en_US
dc.contributor.author Partington, G. en_US
dc.date.accessioned 2009-12-21T02:37:12Z
dc.date.available 2009-12-21T02:37:12Z
dc.date.issued 2006 en_US
dc.identifier 2004004515 en_US
dc.identifier.citation Partington, G. and Walker, S. 2006 'A Note on Transaction Costs and the Interpretation of Dividend Drop-off Ratios', Accounting and Finance, vol. 41, no. 3, pp. 411-414. en_US
dc.identifier.issn 0810-5391 en_US
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. en_US
dc.publisher Blackwell Publishing en_US
dc.relation.isbasedon http://dx.doi.org/10.1111/j.1540-8167.2006.00428.x en_US
dc.title A Note on Transaction Costs and the Interpretation of Dividend Drop-off Ratios en_US
dc.parent Accounting and Finance en_US
dc.journal.volume 41 en_US
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


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