The impact of nominal stock price on ex-dividend price responses

Keith Jakob, Ryan Whitby

Research output: Contribution to journalArticlepeer-review

7 Scopus citations


In this paper, we examine whether nominal stock price can help to explain the ex-dividend day anomaly where stock prices drop by less than the dividend amount on the ex-dividend date. We find that stocks with lower nominal prices have ex-dividend day price drops that are more consistent with theoretical predictions based on an efficient market. After controlling for factors that have been previously documented to influence ex-dividend day stock price behavior, price-drop-to-dividend ratios are closer to one for lower priced stocks. To further explore this phenomenon, we examine the change in the price-drop-to-dividend ratio around stock splits. Firms that split their shares have a larger price-drop-to-dividend ratio after the split, and companies that reverse split their shares have a smaller price-drop-to-dividend ratio after the split. Our evidence indicates that ex-dividend day stock price behavior is influenced by the nominal price of a share and that this relation could also influence the decision to split a firm’s shares.

Original languageEnglish
Pages (from-to)939-953
Number of pages15
JournalReview of Quantitative Finance and Accounting
Issue number4
StatePublished - May 1 2017


  • Ex-dividend
  • Market efficiency
  • Nominal stock price
  • Stock split


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