Past literature
shows that investors use mental account when they are facing dividend
distribution. That is, investors focus on dividend distribution and
irrationally ignore the tradeoff of dividend payment and price decrease. The
dividend is thus deemed as bonus to investors. Furthermore, investors tend to
buy ex-dividend stocks after the ex-dividend day due to the expectation of
price recovery. The buying forces around the ex-dividend day persistently push
the price. After the ex-dividend, investors gradually become rational. The
stocks thus are priced based on the fundametals. The overprice of stocks due to
the ex-dividend events may consequently decreases. Past litearture regarding
ex-dividend focuses on the announcemnet effect and ex-divend effect on the ex-dvidend
day. The contribution of this project is to combine the issues of ex-dividend
and media coverage to investigate whether the investing behavior bias of
investors is strengthened after the coverage of ex-dividend news by media. Past
literature has confirmed that investors refer to the media coverage when they
are making stock picking decisions. However, the past literature did not
further investigate the reaction of investors to the ex-dividend news. This
study fills the gap of the literature to combine these two issues, which may
provide a referecne for investors when they are making investing decisions.
