We analyze trading volume around ex-dividend days. We use NYSE audit file data to decompose total trading volume by trader type. These data permit us to directly test detailed hypotheses regarding the identity of traders around the ex-dividend day. We find evidence of significant abnormal volume by securities dealers that is positively related to dividend yield and negatively related to transaction costs. This paper investigates the relationship between the dividend-policy decisions and investment decisions of a firm.
Recent literature proposes a theory that links the two decisions.
This link is stakeholder theory, which views the firm as a nexus of contracts and includes both investors and non-investors as stakeholders of the firm. By using a proxy for the level of non-investor stakeholder influences, our research finds that a relationship does exist. In a recent transaction, a corporation offered to exchange an outstanding issue selling at a premium for a new issue of somewhat longer maturity and slightly higher market value. This paper examines the transaction and explains its motivation, which is based on accounting and tax considerations. In addition, the paper provides a historical perspective of debt exchanges and describes the sequence of innovations and the resulting legislative responses that led up to this transaction. .