On January 31, 2005, an article appeared in The Wall Street Journal comparing the relative performance of
Question:
On January 31, 2005, an article appeared in The Wall Street Journal comparing the relative performance of stocks in the S&P 500 that pay dividends with stocks in the S&P 500 that do not pay dividends.24 Between the end of the bear market in October 2002 and the date of the article, January 2005, nondividend payers rose by 63 percent, whereas dividend payers rose by 52 percent. Notably, dividend payers have tended to outperform nondividend payers when the market is soft, but not when the market is strong. Based on these patterns, the article contends that the change in the tax treatment of dividends that was made in 2003 did not change investors’ preferences for dividend-paying stocks. Discuss this contention.
StocksStocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...
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Behavioral Corporate Finance Concepts And Cases For Teaching Behavioral Finance
ISBN: 9781259277207
2nd Edition
Authors: Hersh Shefrin