Premium
Dividend Clienteles, the Tax‐Clientele Hypothesis, and Utilities
Author(s) -
Skinner David L.,
Gilster John E.
Publication year - 1990
Publication title -
financial review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.621
H-Index - 47
eISSN - 1540-6288
pISSN - 0732-8516
DOI - 10.1111/j.1540-6288.1990.tb00797.x
Subject(s) - dividend , economics , dividend yield , dividend payout ratio , econometrics , financial economics , yield (engineering) , dividend policy , monetary economics , finance , materials science , metallurgy
Studies of ex‐dividend day behavior have detected dividend‐clientele effects. The ratio of the ex‐day price drop to the dividend is typically less than unity and correlated with dividend yield. The tax‐clientele hypothesis attributes these effects to personal taxation. This study shows that, when studied separately, neither utilities nor nonutilities exhibit the correlation between yield and ex‐dividend day price drop predicted by the tax‐clientele hypothesis. Only by combining utility and nonutility data are the traditional correlations observed. Results are consistent with some sort of dividend‐clientele effect but are inconsistent with tax clienteles.