Dividend Size, Yield, Clienteles and REITs
William G. Hardin III
Published online: 18 September 2010
Springer Science+Business Media, LLC 2010
Abstract Dividend size and dividend yield are typically highly correlated which
substantially hinders the empirical assessment of ex-dividend stock pricing. The
ability to disentangle the joint effect of dividend yield and dividend size on ex-
dividend stock prices is thus of central importance in assessing existing theories.
Fortunately, the REIT asset class provides data having a low correlation between
dividend size and dividend yield allowing for a cleaner assessment of the extant
theories. Evidence from the present study indicates that results that are typically
interpreted as confirmatory of the tax-induced clientele effect may be spurious.
Instead, transaction costs and limit order adjustments are likely the determinants of
the observed relationships between the change in price to dividend ratio, dividend
yield, and dividend size.
JEL Classifications G10
J Real Estate Finan Econ (2012) 45:435–449
W. G. Hardin III (*)
Department of Finance and Real Estate, Florida International University, 11200 SW 8th Street,
MARC 231, Miami, FL 33199, USA
Department of Accounting and Finance, Alabama State University, P.O. Box 271, Montgomery,
AL 36101, USA
Department of Finance and Economics, Mississippi State University, Box 9580, Mississippi State,
MS 39762-9580, USA