Dividend Clienteles, the Tax-Clientele Hypothesis, and Utilities

David L Skinner and Gilster, John E,

The Financial Review, 1990, vol. 25, issue 2, 287-96

Abstract: 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. Copyright 1990 by MIT Press.

Date: 1990
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