The Impact of Dividend Payments on Stock Price: Empirical Evidence From Companies Listed on the Brazilian Stock Exchange

Abstract

This paper studies the impact of the dividend distribution policy on the valuation of stocks listed on Ibovespa (B3), the main Brazilian stock index. The results of an empirical analysis of the behavior of asset prices are presented for periods from 1 to 90 days after the dividend payment date, ex-dividend date, about the expected normal returns for the period. The sample, consisting of 40 events, includes stocks that paid dividends in 2018 and without overlapping events in the 90 days before or after the ex-date. A direct relationship was found between the dividend yield and the abnormal return accumulated after the payment of dividends, high dividend yield, intermediate dividend yield, and low dividend yield. Our results are useful for the financial literature by bringing empirical evidence to Brazil, as well as for the decision-making of equity investors.