The Anomaly of 28 Days between the Ex-Dividend Date and the Payment Date in Taiwanese Stock Markets

Asian Economic and Financial Review, 2015, 5(9),1091-1118

28 Pages Posted: 18 Mar 2014 Last revised: 30 Nov 2015

See all articles by Jen-Chang Liu

Jen-Chang Liu

Takming University of Science and Technology - Department of Banking and Finance

Mark Yeats

Takming University of Science and Technology - Department of Applied Foreign Languages

Date Written: September 12, 2014

Abstract

After 16 years of suspension during the leadership of Steve Jobs, Apple now pays cash dividends. Since the death of Jobs, Apple has distributed twelve quarterly dividends. Of these, cash was paid 7 days after the ex-dividend date on nine occasions, and twice after 8 days. It has been well documented that individuals prefer numbers with salient last digits, such as 0 and 5, when making quantitative decisions. These phenomena motivate us to examine if 7 (in other words, weekly cycle effect) is a salient number in determining the period between the ex-dividend date and the payment date. Since Taiwanese firms pay annual dividends, we conjecture that in Taiwan a period of 28 days is the most common period chosen for annual dividend distribution. This conjecture is verified and we provide evidence that the period decision is mainly affected by weekly cycle effect, and liquidity discretion. The periods are clustering around multiples of 7 from 14 to 49 days. We advance that the cycle of weekdays governs our daily life, just as two hands and ten fingers characterize our human body. Subsequently, we propose a behavioral and heuristic argument to explain why market participants are prone to number with final digits of 0, 5, and even numbers when making quantitative decisions.

Keywords: Dividend policy, Payment date, Price clustering, Record date, Taiwan, Weekday, Weekly cycle, Weekend effect, Heuristics, Number clustering

JEL Classification: G30, G35

Suggested Citation

Liu, Jen-Chang and Yeats, Mark, The Anomaly of 28 Days between the Ex-Dividend Date and the Payment Date in Taiwanese Stock Markets (September 12, 2014). Asian Economic and Financial Review, 2015, 5(9),1091-1118, Available at SSRN: https://ssrn.com/abstract=2396290 or http://dx.doi.org/10.2139/ssrn.2396290

Jen-Chang Liu (Contact Author)

Takming University of Science and Technology - Department of Banking and Finance ( email )

56, Sec 1, Huan Shan Rd.
Nei Hu Dist.
Taipei City
Taiwan
886226585801 (Phone)

HOME PAGE: http://nas.takming.edu.tw/robertliu/

Mark Yeats

Takming University of Science and Technology - Department of Applied Foreign Languages ( email )

56, Sec 1, Huan Shan Rd.
Nei Hu Dist.
Taipei City
Taiwan

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