This is not true. It is market arbitrage that causes the drop in the price. The drop in price cannot be separated from other movement of the price, however due to news about the company or economy or whatever would impact the price. Therefore, the price drop is not going to be exactly the amount of dividend. But you should expect, over say hundreds of dividend payments, that there's no statistically significant difference between the prior day's price and the new opening price compared to the dividend received. If there were, then these millisecond trading algorithms could juice that difference and produce alpha.The drop in share price when a dividend is distributed is not due to shareholders selling shares. The price would drop even if there were no trades around the day of the distribution.
Statistics: Posted by TimeIsYourFriend — Fri Jun 21, 2024 7:00 am — Replies 8 — Views 453