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What Hypotheses Can I Use To Explain This Phenomenon?

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Camel97 | 14:00 Tue 12th Jun 2018 | Business & Finance
3 Answers
It has been found empirically, that on average the total market value of their stock rises when firms announce a dividend. What hypotheses might you offer to explain this phenomenon?
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Avatar Image woofgang
Well I know what i think but why would I do your homework for you? what do you think?
15:08 Tue 12th Jun 2018
Avatar Image ToraToraTora
there are a number of obvious reasons for this and I am sure you'll enjoy writing them up......
15:53 Tue 12th Jun 2018
Avatar Image Peter Pedant
no that helpful so far

one is that people buy in order to get the divident - until it goes ex-d.
second that a divi shows the firm is in good health
so the confidence bit of the share price rises
this presupposes you subscribe to the view that confidence contributes to the share price
BUT
this is obviously a question based on this weeks reading, so read it all again and see if you cant spot the answer in the script
16:49 Tue 12th Jun 2018

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