The Dividend Disconnect

ArXiv ID: ssrn-2876373 “View on arXiv”

Authors: Unknown

Abstract

Many individual investors, mutual funds and institutions trade as if dividends and capital gains are disconnected attributes, not fully appreciating that divide

Keywords: Dividend Policy, Capital Gains, Investor Behavior, Tax Arbitrage, Equity

Complexity vs Empirical Score

• Math Complexity: 2.0/10
• Empirical Rigor: 8.5/10
• Quadrant: Street Traders
• Why: The paper focuses on behavioral trading patterns and market implications using extensive real-world datasets and robust empirical analysis, with minimal advanced mathematical formalism.

  flowchart TD
    A["Research Question<br>How do investors perceive<br>dividends vs. capital gains?"] --> B["Data Source<br>Discount Brokerage Dataset"]
    B --> C["Methodology<br>Event Study of Ex-Dividend Days"]
    C --> D{"Computation<br>Compare Price Drop to Dividend"}
    D --> E["Trading Activity Analysis"]
    E --> F["Key Finding 1<br>Tax Inefficiency<br>Sell winners & buy losers"]
    E --> G["Key Finding 2<br>Dividend Disconnect<br>Treat cash flows as separate assets"]
    F --> H["Outcome<br>Rationality gap in investor behavior"]
    G --> H