The Effect of a Dividend Payment on the Stock Price

Essay from the year 2013 in the subject Business economics - Investment and Finance, grade: 100%, , language: English, abstract: This paper is an introduction to the effects that dividend payments have on the stock price and a discussion of various opinions about payment effects. One fundamental framework in this field of study has been the 'dividend irrelevance theorem' by Modigliani and Miller (1961) that was published in the journal of business as a part of their analysis of 'Dividend Policy, Growth, and the Valuation of Shares'. With a set of given assumptions they arrive at the conclusion that the dividend policy is irrelevant. As the second source I consult an article by the American stock exchange NASDAQ (2012) about the so-called 'dividend capture strategy', which I discuss skeptically. The third article I refer to interestingly holds the opposite of the NASDAQ article.